Overall, the bright stock market appears to be balanced, but there are regional supply-demand imbalances, Kumar said during a Jan. 24 webinar. Supply in Asia is around 300,000 t/y short of consumption, which is supplemented by imports from North America.

Asias demand for bright stocks is outpacing demand due to higher consumption of bright stocks-derived products such as rubber process oils and monogrades in a host of developing markets in the region, Kumar explained in an interview.

Japan has very little demand for bright stocks in automotive engine oils, he added. China has very strong demand for bright stocks, especially from segments such as rubber process oils and industrial and automotive gear oils.

In the global market, bright stocks are underrepresented in automotive engine oils and overrepresented in marine oils and greases and industrial and automotive gear oils.

Although passenger car motor oils make up approximately 22 percent of global finished lubricant demand, the category only takes up around 5 percent of bright stock demand. Similarly, automotive gear oils account for about 4 percent of global finished lubricant demand but almost 20 percent of global bright stock demand.

Kline expects global bright stock demand will fall by approximately 250,000 t/y by 2021.

The slower rate of finished lubricant demand growth and swift quality shifts in automotive engine oils worldwide will result in a net decline in demand for bright stocks, Kumar noted in the presentation. Although bright stock demand for automotive gear oils, greases and process oils is expected to increase, and bright stock demand for marine oils and industrial gear oils is predicted to remain the same, the demand decline in bright stocks for passenger car motor oils and heavy-duty motor oils is significant enough to cause overall demand to decrease.

Group I plant closures continue to present a major challenge to the bright stocks market. Up to 1.4 million tons of annual bright stock capacity has shut down across the globe since 1997. Over the past 20 years, bright stock supply has been an inevitable casualty of Group I rationalization due to technical changes in finished lubricant quality and burgeoning Group II/III supply, Kumar said. In Asia-Pacific, nearly 175,000 tons of bright stock capacity has shut down since 1997.

Kumar believes competition from Group II and Group III base stocks is the key driver impacting bright stock production in the region. Because of growing Group II and Group III competition, Group I plants are being forced to operate at lower rates, hindering conventional Group I bright stock production, especially in Europe. Group I base oil demand took up 65 percent of global demand in 2007, but decreased to 39 percent of demand by 2017, according to LubesnGreases Lubricants Industry Factbook.

Other market dynamics will have to cover the gap, and Kline believes polyisobutylenes are the best-suited to address the impending deficit. PIBs are a favorable alternative in terms of availability and technical suitability, and moderately suitable from a pricing perspective. Kline also found high-viscosity polyalkylene glycol to be a moderately suitable alternatives, with the product faring well in all categories but price.

According to Klines projections, conventional API Group I bright stocks, which are made at Group I refineries, make up about 85 to 90 percent of current supply. The remainder come from naphthenic base oil plants or are alternate bright stocks, including those from Group II plants or naphthenics that meet or exceed Group I parameters.

Bright stock supply is expected to decrease to approximately 2.4 million metric t/y by 2027, leading to a net deficit of between 250,000 t/y and 300,000 t/y, forecasts Kline. This shortfall represents the combined effects of the curtailed demand for heavy and monograde engine oils; increase in demand for industrial oils and process oils; supply erosion resulting from Group I plant shutdowns/conversions; and increased supply from Group V and alternate bright stock plants, he concluded.