The demand for Group I is expected to remain large for the coming years, though Group II & III are expected to respond rapidly by 2023. The need for higher quality base oils in automotive sector, coupled with, government regulations regarding the environment and better fuel economy are expected to drive this shift.
According to a new report published by Allied Market Research titled, "Base oil Market by Application, Type: Global Opportunity Analysis and Industry Forecast, 2017-2023," the base oil market was valued at $35,430 million in 2016, and is projected to reach at $38,031 million by 2023, growing at a CAGR of 1.0% from 2017 to 2023. Asia-Pacific dominates the base oil market, both in terms of volume and value, and is expected to maintain this trend throughout the forecast period.
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In 2016, North America and Asia-Pacific collectively accounted for more than two-thirds of the entire global base oil market, in value terms. Asia-Pacific is expected to grow at the highest rate during the forecast period. High automotive lubricant demand and industrial growth from emerging countries, such as China, India, South Korea, and Australia, are estimated to drive the market growth.
The major companies profiled in the report include BP PLC, Chevron Corporation, Ergon Inc., Evonik Industries, Exxon Mobil Corporation, H&R lwerke Schindler GmbH, Nynas AB, Petronas, Royal Dutch Shell PLC, SK Lubricants Co. Ltd., and Total S.A.
The demand for high-grade lubricant oils in the automotive industry, and stringent environmental legislation leading to strict performance standards drive the growth of the market. However, the fluctuating costs of crude oil and regulations concerning emission norms are expected to hamper the market growth in the future. The global shift from Group I base oils to Group II & III present numerous growth opportunities to market players.
The automotive oil segment accounted for almost half the share of the total base oil market in 2016, in terms of value, and is expected to maintain its dominance during the forecast period. However, application of base oils in industrial oils is expected to grow at a comparatively high rate due to stricter emission norms in EU and EPA regions.
The global economy profits from declining oil costs because of high financial multiplier in the emerging oil-importing economies. Therefore, base oil utilization in the automotive sector is expected to grow through both increasing purchasing power (new and second-hand automotive deals) and expanding vehicle usage. This growth is estimated to be particularly noticeable in the developing countries, and control the decline in Group I base oil demand.
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