How companies can navigate the future of lubricants amidst evolving demand, technological advances, and environmental goals.
The global basestocks industry is at a pivotal juncture, with significant changes in finished lubricant demand reshaping the market landscape. Although the volume growth for finished lubricants is limited, value growth prospects are promising due to evolving quality levels. Traditional demand centers are stabilizing, while new growth markets emerge in developing regions. Additionally, the rise of electric vehicles and a focus on sustainability are profoundly influencing lubricant demand, pushing companies towards basestocks that support carbon footprint reduction.
Growth in low viscosity lubricant demand
This evolving landscape offers both opportunities and challenges. The industry is witnessing a transition towards low viscosity oils, such as SAE 0W-xx for passenger cars and lighter grades for heavy-duty motors, which emphasizes the role of high-performance basestocks. Group III basestocks are becoming commoditized, whereas Group III+ basestocks are establishing a niche, competing with polyalphaolefins (PAO).
Sustainability
Sustainability targets are driving the adoption of re-refined basestocks and bio-based basestocks, as they contribute to carbon footprint reduction. This trend underscores the industry’s commitment to environmental stewardship and positions these alternative basestocks as increasingly attractive options for companies looking to align with sustainability goals. But the market faces the challenges of limited availability of good-quality products.
Challenges to the existing supply, especially, Group I
Group I basestocks face declining technical demand and increased competition from Group II, alongside pressures from maintenance challenges in older plants. However, they are expected to retain demand in specific technical applications.
These fundamental shifts necessitate strategic planning by companies to navigate the future landscape, emphasizing innovation, environmental responsibility, and market adaptation.
These topics are explored in depth during Kline’s on-demand webinar: The Global Basestocks Industry at the Cusp of Fundamental Shifts. Discover the future of the lubricant and basestocks industry, gain insights into market shifts, synthetic trends, and more.
