Global Fuel Additives: Market Analysis and Opportunities

Regulations and Fuel Economy Norms Will Continue to Affect Fuel Additive Consumption

Written By: Eric Pimenta and Kunal Mahajan

According to the recently published Global Fuel Additives: Market Analysis and Opportunities report by global market research and management consulting firm Kline, global fuel additive consumption is about 820 kilotonnes in 2016. North America is the largest fuel additive-consuming region in the world due to its high fuel consumption for transportation, as well as supported by the mandated additive usage for gasoline in the United States.

Fuel additives are categorized into three key segments: blending, shipping, and storage, performance additives, and the aftermarket.

The blending, shipping, and storage segment represents additives that are added at the refinery and is the largest segment, accounting for more than two-thirds of the total fuel additives market.

Performance additives applied by fuel marketers to differentiate themselves in the market is the second largest segment of the market. This segment can be further divided among gasoline performance additives, diesel performance additives, and other fuels.

Aftermarket additives are those bought and applied by vehicle owners. The distribution channels are also different for this segment. Gas stations, workshops, and auto part stores are some of the channels used to sell additives in this segment.

Diesel is the most consumed fuel globally. Therefore, additives such as cetane improvers and cold flow improvers, used for diesel, are among the most consumed fuel additives in the market.

Additive consumption depends on several factors, such as fuel consumption, treat rates, fuel grade, and regulations.

The larger the share is for premium fuels sold in the market, the higher the consumption of additives is expected for that market. With the anticipated rise in sales of premium fuel in Asia as a portion of customers switch to premium fuels, consumption of additives will also increase in the region.

According to Kunal Mahajan, a Project Manager in Kline’s Energy Practice, “Tightening fuel economy norms globally are expected to slow down the growth in the fuel consumption, adversely affecting fuel additive demand growth. Furthermore, regulations can also have both a positive and negative impact on the consumption of fuel additives. Regulations such as the “Total Additivation Program” in Brazil mandating minimum treat rates are expected to boost the demand for fuel additives if implemented.”

“Regulations mandating minimum ethanol blending with gasoline and biodiesel blending with diesel could have a positive impact on additives such as corrosion inhibitors and anti-oxidants but a negative impact on additives such as lubricity improvers,” Mahajan adds “Biodiesel improves lubricity, but has poor oxidative stability. This will adversely impact the demand growth of lubricity improvers if the governments around the world, especially in Asia, are successful in implementing the biofuels mandate. On the other hand, such mandates will favor the growth of anti-oxidants and corrosion inhibitors. Ethanol absorbs moisture, which could cause corrosion, due to which the demand for corrosion inhibitors will increase.”

Based on the above factors, globally, fuel additives consumption is expected to grow at a compound annual growth rate of 1.9% from 2015 to 2020.

Insights from the Global Fuel Additives: Market Analysis and Opportunities report will be discussed in an upcoming webinar that will be held on Thursday, February 2, 2017 at 9 AM EST. Please click here to register.

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