Base Oil is produced from refining crude oil or through chemical synthesis, which is basically used to produce lubricating oil. Base oils normally make up to 70-97 % of the formulation of a lubricants oil.
We know the American Petroleum Institute (API) has categorized base oils into five categories. The first three groups (Group I, II, III) are refined from petroleum crude oil. Group IV base oils are full synthetic oils.
A global survey reveals that the Group II and Group III usage will rise 41% and 38% accordingly and Group I usage is expected to fall 28% by 2030.
Around 60% of companies are now using Group I base stocks. An expected shift to Group II and III base stocks are more likely to help meet the regulations; however, these grades are being used more frequently across the industry.
Also, it is expected that the Group III oils will be the most commonly used grade in 10 years.
Besides, the decline of Group I will impact the overall market mostly. Companies may have to take more drastic measures like closing plants or refineries, shutting down parts of their business, taking on less work or laying off workers.
Then the refineries may have to change the overall work techniques, working with new base oil manufacturers, changing equipment or relying heavily on other groups of base oils.
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 favoured for specific formulations well into 2030.
Then, the bright stock users may face more difficulties obtaining supply as the market shifts from Group I to Group II and Group III base oils. So, companies should take initiative to innovate new products as per the engine demand for the near future.
The Asia-Pacific is projected to lead the global base oil market 41.4% share of the global base oil market due to the robust development of the industrial and automotive sector.
The market size is expected to increase in Asia-Pacific, due to the economic growth in the nations such as South Korea, China, Bangladesh, and India.