Group II Base Stock Eyeing Growth or not?

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Base Stock Oil
Group II Base Stock Eyeing Growth or not?

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The global base oil market is shifting to high-quality oils to meet the requirement of the modern machinery and considering the environment protection.

In Bangladesh, the new industrial machinery and equipment application also require quality lubricants products driven by the growing power sector, manufacturing, logistics, automotive manufacturing, and others.

However, around 60% lubricants market is captured by low-quality products, which is produced from, recycle base oil, low-quality base oil or sometimes straight mineral base oil without mixing any additives.

There are few lubrication oil manufacturers in our country, which are blending non-standard engine oil by mixing some virgin base oil with recycling base oil, which damages equipment.

In our country, around 80% of companies use Group I base stocks. An expected shift to Group II and III base stocks are more likely to help meet the regulations; however, lubricants market is going to the worst situation day by day.

In comparison, India’s current BS-IV norm, which is roughly equivalent to Europe’s Euro IV standard, was introduced in 2010.

Earlier, the Indian government has planned to implement BS-VI for all vehicles from April 2024 but later decided to pull forward the rollout to April 2021.

So, where we are in now? The industry is clearly anticipating a decline in demand for Group I; however, market insiders anticipates that Group I base stocks will continue to be relevant and favored for specific formulations well into 2030.

However, the companies should take initiative to innovate new products using quality base stocks as per the engine demand for the near future.

The quality of a lubricant can depends upon the type of base oil used for the refining and/or production method used to produce the base oil. It is critical toward the grade of lubricant as base oils normally make up to 70-97% of the formulation of lubricants.

Globally, In 2016, Group II and III segments collectively accounted for one-third market share. In terms of value, Group II is the top investment pocket in the base oil market, attributed to the replacement of Group I base oil owing to the increase in the trend towards low and mid SAPS specifications (Sulfated Ash, Phosphorous, and Sulfur) and lighter viscosity grades.

Thus, this segment is anticipated to provide high stability along with significant return on investment for the stakeholders, owing to its high growth rate and significant revenue contribution.

Overall, the consumption of base oil in Asia-Pacific is expected to increase, owing to growth in industrial development, demand from the automotive industry, and stable economic growth.

However, substantial development in Group II and III base oils are anticipated to boost the market growth in this region.

Group II Base Stock Eyeing Growth or not?
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