While the quality of used oil is improving and benefitting both the re-refining industry and the environment in some regions (see our recent blog, Global Used Oil: What Are the Obstacles on the Road to Sustainability?), such is not the case globally. Many countries, such as Brazil, China, India, Germany, France, and Canada, consider used oil to be hazardous waste.
According to Kunal Mahajan, Project Manager in Kline’s Chemicals & Energy practice, “There is very little used-oil trade happening in these countries, with the used-oil industry largely being a domestic one and, thus, impacted by local regulations, supply and demand, and other requirements.”
Here are some key highlights of the used-oil industry in different countries and regions:
Used-Oil Generation Rates
Canada has a higher used-oil generation rate than most other countries/regions due to its relatively larger share of automotive lubricants, which have higher generation rates than industrial lubricants. In comparison, markets such as the United States, Western Europe, and South Korea have smaller shares of automotive lubricants.
Japan and India have the lowest used-oil generation rates among the key markets, due to Japan’s used oil stemming from its share of metal-working fluid (MWF) and rubber process oils — MWF produces only small amounts of used oil, and rubber process oils do not generate any used oil. Further, a significant share of total lubricant demand in Japan comes from greases, which also do not generate used oil. In India, a similar scenario is true: rubber process oils, white oils, and greases — none of which generate used oil — comprise a significant percentage of the country’s total lubricant demand.
Used-Oil Collection Rates
Canada, China, and Western Europe have high used-oil collection rates due to their well-developed collection infrastructures. In Canada, the collection of used oil is managed by individual used-oil associations, leading to higher collection rates, while government-authorized bodies and associations manage the collection of used oil in Western Europe. This latter region also has a well-developed re-refining industry that is involved in used-oil collection, thus boosting Western Europe’s collection rate.
In China, strict implementation of regulations has led to high used-oil collection rates. The country’s total collection rate of used oil has increased due to the government’s tightening of regulations and its enhancing enforcement mechanisms for hazardous-waste collection.
Russia is at the opposite end of the spectrum with regard to collection rates. Given the tremendous size of the country and the long distances that collectors thus must travel to collect the used oil, it isn’t profitable for them to transport anything but large volumes of used oil. In cases where the volume is small, the generator must cover the costs, resulting in low collection rates. Further, collections in Russia are often made on the grey/black market, where proper records are not maintained, resulting in lower reported used-oil collection rates in the country.
Used-Oil Disposal Methods
Used-oil disposal methods vary by country/region; in some markets, fuel is by far the largest disposal method, while re-refining is the primary method in others. The United States, Western Europe, Canada, China, and Brazil are among those markets with well-developed re-refining capacity, resulting in a higher share of re-refining in the disposal of used oil. In contrast, Japan, South Korea, Thailand, and Mexico have no (or very minor) re-refining capacity; consequently, almost all used oil in these countries is disposed of as fuel. Some countries utilize both disposal methods — although fuel is the leading method of disposal in Indonesia, India, Malaysia, and Russia, re-refining has a significant share in the disposal of used oil in these markets.
For more information on the subject, check out Kline’s just-published Global Used Oil and Re-Refined Lubricants: Market Analysis and Opportunities report. A comprehensive analysis of the global used oil and re-refined lubricants industry in the wake of record low crude oil prices and low base oil demand due to COVID-19, it focuses on key trends, developments, changes, challenges, and business opportunities.
