Increased Demand from Automotive Industry Fueling the Global Base Oil Market

Base oils are primarily used for the manufacturing of lubricants, which are obtained by refining crude oil or by chemical synthesis. They reduce volatility of emulsions, which in turn leads to their greater stability since stable emulsions are said to be more efficient for lubricating applications. Moreover, they exhibit various properties such as increased viscosity index, improved oxidative stability, low Sulphur content, high level of saturation, and reduced volatility, among others. Thus, looking at these benefits of base oils, the performance of engine oils and lubricating greases have improved over the years, thereby leading to a greater demand.

Drivers, Opportunities, & Restraints

The global market for base oil is experiencing growth, mainly due to the following factors:

  • Growing demand for finished lubricants from various industries
  • Increased demand for base oils in the automotive oil applications
  • Growth of various end-user industries

In addition, ample investments are being made by the key players in order to address the increasing demand for base oil globally. However, high manufacturing cost of base oils is the major deterrent for the growth of this market. Since the manufacturing of base oils involves extensive R&D activities, it increases the overall cost. Moreover, the global market for base oil is highly concentrated and price sensitive because of the less number of players in this market, the reason being high entry barriers, which make it difficult for the new players to enter into the market.

Market at a Glance

The value of the worldwide base oil market which was projected to be USD 39.43 Billion in 2014 is expected to reach USD 41.68 Billion by the end of 2020, growing at a CAGR of 0.95% between 2015 and 2020. Of all the regions, Asia-Pacific is expected to be the biggest market, and is also expected to grow at the highest CAGR over the forecast period, owing to the rising population, increasing income levels, flourishing automotive sector, and increased usage of base oils in various applications.

Among applications, the automotive oil segment is expected to be the largest market by 2020, and it is also predicted to grow at the highest CAGR over the forecast period, mainly because of the increased demand for finished lubricant products in the automotive industry.

Based on type, the Group I segment is expected to lead the market with highest market share, thanks to its extensive use of Group I across many industries because of its simpler refining process and cost competitiveness. However, the Group IV segment is expected to grow at the highest CAGR during the projected period, owing to the increase in usage of Group IV base oils in various industrial and automotive applications.

Royal Dutch Shell plc, Chevron Corporation, Neste Oil, AVISTA OIL AG, Nynas AB, and PETRONAS, among others are the leading players involved in the global market for base oil.

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Research Scope

The forecasts and analysis of the global market for base oil has been done by breaking it down into following segments and sub-segments:

  • Type: Group I, Group II, Group III, Group IV, Group V
  • Application: Automotive Oil, Industrial Oil, Metalworking Fluids, Hydraulic Oil, Greases, Others
  • Geography: Asia-Pacific, Europe, North America, RoW

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