Global Base Oil Demand to Grow


MOSCOW – Global base oil demand will see significant regional variations in type and volumes consumed, marked by growth of API Group II and Group III base oils and decline of Group I base oil by 2030, according to a presentation at the WRA Base Oils and Lubricants in Russia and the CIS conference.

Overall demand is expected to reach 43 million tons by 2030, up from 35 million tons in 2010, according to Purvin & Gertz consultancy. This growth will be followed by a competition among different base oil groups.

Group I base oils will account around 60 percent of the total global base oil consumption by 2020, declining to around 40 percent by 2030, John Leavens, the firms London-based consultant, told the conference held here in March. At least until 2020, Group I will remain the dominant base stock for lubricants blending.

Significant increase in demand for Group II and III base oils is anticipated as a result of greater efficiency and lower exhaust requirements for passenger car and commercial diesel engines.

The split between base oil groups will change substantially in Europe in the next two decades, according to Leavens.
At the moment European lube marketers still produce base-tier engine lubes blended from Group I base oils, he continued, SAE 15W-50 or 15W-40 grades primarily used for cars that do not require high performance.

Mid-tier standard lubricants can be made from Group I and Group III base oils by meeting SAEs lubricant specifications (15W-40 or 10W-40 grades). They can also be produced by using Group II base oils, he said. Top-tier engine oils for high performance and luxury cars or highly stressed engines are produced from Group III base oils using different additive formulations, Leavens noted.

As Europes population grows, its car fleet renews. Because new cars will use mid- and top-tier engine oils, more lubricants will be made from Group II and III base oils.

We will see a gradual reduction of Group I base oils in Europe because they no longer will be used in most automotive lubricants, Leavens stated. It will result in a lot of Group I production capacity excesses and expected plants shut-downs, He said that demand for Group I base oil in Europe could remain, but it will be driven by industrial and marine lubricants consumption.

North America
Group II has a much higher percentage of the North American market because Group II+ producers have displaced Group I products simply because they established a plentiful supply and cost-effective [Group II] base oil production.

Base-tier engine lubricants blend either Group I or II base oils because the supply is prevalent and cheap, Leavens stressed. Mid-tier engine oils are also produced from Group II base oils, while top-tier engine oils are made from Group III base oils.

Newer cars and trucks require mid- and top-tier engine oils because OEM specifications require premium quality lubricants used in the engines. While new vehicles increase demand for Group II and III base oils, Group I demand in Canada and the United States center around industrial and marine lubricant sectors.

Similar to Europe, [North American] Group II and III base oil demand is rising while Group I demand is falling, Leavens noted. The main difference between Europe and North America is Group II and III base oils. Whereas the United States and Canada consume more Group II base oil, Europe consumes more Group III base oil.

Asia, with Russia and the CIS
Base oil demand in Asia will rise rapidly over the next two decades. In 2010, total demand in Asia was 13 million t/y, which is expected to rise to almost 20 million t/y by 2030, according to Purvin & Gertz. European and North American demand, however, is expected to fall by 2030, slowly but surely.

This market is characterized by large Group III base oil supplies from South Korea. Since 2005, Group III demand in the region has been relatively slow, and will stay so through 2020 [compared to the same demand in the West], Leavens said, adding that since 2005 a lot of Korean Group III production was slated for the United States.

Another characteristic of the Asian market is its strong industrial growth and rapidly expanding automotive fleet. The population of cars, trucks and buses increases fast, and by 2030 it will lead to increases in Group II and III base oil demand, Leavens said.

A greater influx of newer cars and trucks will result in stricter local legislation that will follow the Western lube specification trends. In Asia, Group I demand remains in base-tier automotive, industrial and marine lubricants, while overall demand in the next two decades will stay up, with a steady decline of Group I base oils, Leavens said.

Straddling Europe and Asia, Russias Commonwealth of Independent States is a market unto itself that will be dominated by Group I demand by 2020. The consultancy expects steady industrial growth and an expanding automotive fleet, although lubes quality requirements will be less stringent than in Europe.

Nevertheless, new cars and trucks will result in legislation that follows European trends. Luxury and new cars will require mid- and top-tier lubricants, while Group I base oils will remain the base tier for automotive, industrial and marine lubricants, Leavens said.

Overall the base oil demand in Russia and the CIS will grow with Group I demand entering slow decline from 2020 on, he concluded.

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