Applications in the automotive sector promotes the Global Base oil Market

The MarketWatch News Department was not involved in the creation of this content. Sep 25, 2020 (Market Insight Reports) — Base oil Market Overview Base oils are major constituents of any lubrication product that helps them obtain different specifications such as thermal stability, viscosity, additive solubility, seal compatibility, etc. The […]

The MarketWatch News Department was not involved in the creation of this content.

Sep 25, 2020 (Market Insight Reports) —
Base oil Market Overview

Base oils are major constituents of any lubrication product that helps them obtain different specifications such as thermal stability, viscosity, additive solubility, seal compatibility, etc. The final product generally goes through a series of refinements. Growing demand for hydraulic fluids, thermal oils, and metalworking fluids has increased the market capacity for the global base oils market.

Base oil Market Size, Share, and Growth

The global Base oil market is currently valued at 25 billion USD, and it is expected to grow at a CAGR of 5.1% in the period between 2020 and 2025. This growth is attributed to the rising demand for Group-I and Group-II base oils in the automotive industry, which is the prominent factor driving growth.

Recent Developments

In September 2020, ExxonMobil expanded their agreement with Global Thermostat with the intention to improve the direct air capture technology. This is a 12-month agreement for technical evaluation that will determine the feasibility and potential scale of Global Thermostat tech that captures carbon dioxide directly from the air.

Shell Gas B.V, a subsidiary of Royal Dutch Shell plc., announced their decision for its FID. This will create a new LNG processing unit in Nigeria. Once operational, this new unit will have a capacity of 8 million tonnes.

Base oil Market Segmentation:

The global Base oil market is segmented into the following categories:

On the basis of Group:

    1. Group-I

    2. Group-II

    3. Group-III

    4. Group-IV

    5. Group-V

On the basis of Type:

    1. Mineral

    2. Synthetic

    3. Bio-Based

On the basis of Application:

    1. Automotive oil

    2. Industrial oil

    3. Hydraulic oil

    4. Grease

    5. Metalworking fluid

Based on the application, the automotive oil segment has nearly half of the total demand as compared to other applications. This is primarily because of the shift in gears in the positive direction in the technology towards the automotive sector. New engines are designed to improve the overall efficiency of the machine and this has sparked a need for high performing lubricants.

Group-I segments dominate the market with over 51% share in 2020. This high market share in terms of volume is attributed to the fact that Group-I oils are used in an array of industries worldwide and are available at a relatively lower price as compared to other groups. Group-I products generally constitute 90% base oil and 10% additives.
The market for group-II oil is constantly increasing in the European and Asia-Pacific region

Market Drivers:

The global base oil market is driven by the growth in the automotive sector and Industrial lubrication sector. Huge investments are being made in the automotive sector for enhanced efficiency of the vehicles this naturally leads to the demand for high-performing fluids and lubricants for better-synchronized performance.

Regional Analysis:

The Asia Pacific region is expected to dominate the base oil market in the coming years. This is due to the fact that major companies operating in the base oils market have shifted their production activities to the Asia Pacific region owing to the uncapped market and cheap availability in the mentioned region. In particular, China is a fast-growing market accredited to its rich presence of natural resources. It is experiencing a high demand for production activities and while being home to a giant proportion of the global population.

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Covid-19 Impact on the Base Oil market:

The Covid-19 global pandemic has affected severely the major and minor economies of the world. Oil industries witnessed a hammering blow as the demand for various products dropped to an all-time low with crude oil prices dropping to negative values at a certain stage. The production activities of the automobile and industrial goods came to a complete standstill which created an untoward environment for trading activities. Lately, the market is recovering from the morbid impact of the novel coronavirus. Financial experts posit that the market will start to get on track by late 2020.

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