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.

PCMO formulation changes are driven by improvements in fuel economy, increasing engine oil durability, maintaining compatibility with emission control devices and biofuels such as ethanol and biodiesel. Previous quality upgrades have led to a lowering of the sulfur and phosphorus content in engine oils to improve their compatibility with emission control devices. This has resulted in a reduction in the usage of Group I basestocks, which contain high amounts of sulfur. The basestock contribution to PCMO sulfur is minor with the usage of Group III basestocks.

The need to improve fuel economy continues to drive the use of lower-viscosity-grade oils. This trend, initially strong in North America and Western Europe, has started to catch on in other markets as well. To ensure that these low-viscosity oils continue to provide long drain intervals, they need to be made more durable in terms of oxidative and thermal stability. Moreover, they also need to follow the stringent NOACK limits, which identify volatility among basestock formulations.

As a result of the stringent NOACK limits, use of Group II-based formulations is becoming limited in many markets. Since Group II and II+ basestocks are not synthetic, they are also left out of the synthetic oil market. On the other hand, in most of the markets, Group III basestocks are often approved and meet the standards required for synthetic formulations. As a result, demand has shifted away from Group II towards Group III basestocks.

Within the heavy duty motor oil (HDMO) market, the demand is primarily shifting towards Group II type basestocks as market predominantly consumes SAE 15W-40 grades. There is small but growing demand for 10W30 grade in North America and Western Europe and minor demand for 5Wxx. As a result, demand for light grades of basestocks is limited in the HDMO market.

Within the industrial lubricant market, applications that require high viscosity and solubility continue to demand Group I basestocks. In other applications, where there is no technical limitation on the use of Group II and III basestocks, they have made inroads, and compete against Group I. In certain applications, such as transformer oils and metalworking fluids, among others, naphthenic basestocks have an established market.

These findings and more can be found in the recently published Global Lubricant Basestocks: Market Analysis and Opportunities report and will be discussed in an upcoming set to be held on Wednesday, October 7, 2015 at 9 AM EDT by Anuj Kumar, Project Manager of Kline’s Energy Practice. If you are interested in joining us for the webinar, you may click here to register.

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