Changing Basestock Supply Landscape and the Growing Significance of Merchant Marketers

The global lubricant basestock market has undergone a structural change over the past decade. The change, initially triggered by the need for high-performance basestocks, was further abetted by the enormous new basestock capacity created worldwide. Simultaneously, finished lubricant demand growth has been significantly outpaced by new capacity additions. Continue reading

Global Lubricant Basestocks: Market Analysis and Opportunities

Stimulated by changing demand patterns, the global basestock industry is witnessing significant changes

According to the Global Lubricant Basestocks report, the basestock market registered a very small growth in 2016 over the previous year. While Group II and III basestocks registered good growth rates, Group I continued on a downward trajectory. The global basestock market is in the middle of witnessing substantial structural changes. These changes are stimulated by changing demand patterns due to evolving technological and environment requirements, as well as changes in the supply landscape.Continue reading

Global Lubricant Basestocks: Market Analysis and Opportunities

Fuel Economy and Stringent Emission Standards are Increasing Demand for Low-viscosity Grade Basestocks

The improving quality of finished lubricants and the burgeoning supply of high quality basestocks continue to create greater pressure on Group I basestocks to exit the market in the face of stagnant overall demand. In 2015, Group I basestocks account for less than half of the global basestock demand, down from over two-thirds a decade earlier, according to the recently published Global Lubricant Basestocks: Market Analysis and Opportunities report.

Passenger car motor oils formulation changes are driven by improvements in fuel economy, increasing engine oil durability, and maintaining compatibility with emission control devices and biofuels. The high viscosity index, low volatility, and low sulfur content has resulted in the reduced use of Group I and increased use of Group II and Group III.  Continue reading

Brazilian Finished Lubricants Market

Despite Projected Growth, Economic Conditions are Expected to Strain the Brazilian Finished Lubricants Market

Brazil’s total demand for consumer automotive lubricants is nearly 400 kilotonnes. Passenger car motor oil (PCMO) accounts for the majority of the total Brazilian market. Furthermore, there are nearly 40 million passenger cars and light commercial vehicles and over 14 million motorcycles in use in Brazil in 2015.

The PCMO demand profile in Brazil has changed in the last few years due to OEM recommendations. Lower multi-viscosity grades account for almost two-thirds of the total PCMO demand. Monogrades account for about 6% of the PCMO market. The leading grades consumed are 15W-40/15W-50, followed by 20W-40/20W-50. A new SAE 0W-20 grade was introduced in the market in 2013, mostly as a result of Honda’s change in factory- and service-fill oil specifications and recommendations, but volumes are low as of 2015.Continue reading

Indian Finished Lubricants Market

Group II Basestocks Witness Increased Usage in the Indian Finished Lubricants Market

India is the third-largest lubricant-consuming market in the world at approximately 2.3 million metric tons in 2015, according to Kline’s estimates. Generally, the Indian finished lubricant market has outpaced global finished lubricant demand growth. Since 2010, the finished lubricant demand growth in India has exceeded the global finished lubricant demand growth, except for 2013, where demand fell marginally in the country. The penetration of higher quality lubricants in India compared to the developed markets, such as North America and Western Europe, is small; however, the market is exhibiting a clear shift towards the use of better quality lubricants and basestocks.

According to Anuj Kumar, Project Manager in Kline’s Energy Practice, “This play toward Group II is eerily similar to the same shift that was seen in developed markets. Government regulations, fuel economy mandates, and lube performance demands by OEMs, coupled with the enticing pricing for Group II (as compared to Group I) has brought about this sense of déjà vu in the market.” Continue reading

Global Lubricant Basestocks: Market Analysis and Opportunities

Kline’s Index of Base Stock Production and Re-refining Cash Margins Indicates a Downward Turn for Profitability

In January 2014, Kline, a worldwide consulting and research firm serving the needs of organizations in the lubricants and base stocks industry, introduced its monthly Base Stock Margin Index, a characterization of recent cash margin contributions in the U.S. base oil market over the past 24 months.

The Index estimates cash margin contributions associated with U.S. Group II base stock production. It simulates EBITDA before the deduction of corporate SG&A expenses for typical VGO-based virgin base stock plants and RFO-based re-refineries. Continue reading

Global Lubricant Basestocks: Market Analysis and Opportunities

Kline’s November Index of Base Stock Production and Re-refining Cash Margins Shows Second Straight Month of Declines

In January 2014, Kline, a worldwide consulting and research firm serving needs of organizations in the lubricants and base stocks industry, introduced its monthly Base Stock Margin Index, a characterization of recent cash margin contributions in the U.S. base oil market over the past 24 months.

The Index estimates cash margin contributions associated with U.S. Group II base stock production. It simulates EBITDA before the deduction of corporate SG&A expenses for typical VGO-based virgin base stock plants and RFO-based re-refineries. Continue reading

Global Lubricant Basestocks: Market Analysis and Opportunities

The Need for Fuel Economy and Stringent Emission Norms is Increasing Demand for Low-viscosity Grade Basestocks

In 2014, global demand for finished lubricants is estimated at 39.4 million tons, a marginal decline from 2013. Automotive lubricants account for over 50% of the total demand, with industrial products and greases accounting for the balance. Asia-Pacific is the largest lubricant-consuming region, accounting for over 40% of global demand, compared to North America, which accounts for just 22%.

Passenger car motor oils (PCMO) are defined by their quality specifications, viscosity, and, from a labeling point of view, the basestocks used to blend the product.Continue reading

Global Lubricant Basestocks: Market Analysis and Opportunities

Kline’s February Index of Base Stock Production and Re-refining Cash Margins Reflects Improved Profitability Driven by Declining Crude Oil Prices

In January 2014, Kline & Company, a worldwide consulting and research firm serving needs of organizations in the lubricants and base stocks industry, introduced its monthly Base Stock Margin Index, a characterization of recent cash margin contributions in the U.S. base oil market over the past 24 months.

The Index estimates cash margin contributions associated with U.S. Group II base stock production. It simulates EBITDA before the deduction of corporate SG&A expenses for typical VGO-based virgin base stock plants and RFO-based re-refineries. Continue reading