LONDON – The global white oils market will show moderate growth, expanding to 1.6 million metric tons by 2023, consultancy Kline & Co. projected. Current demand is estimated at about 1.5 million tons, Milind Phadke, a director in the consultancys energy practice, told the ICIS Base Oils & Lubricants Conference here last month.
Major markets include Asia-Pacific – China, India, South Korea and Taiwan – the United States and Europe – mainly Germany, France, the United Kingdom, Italy, Turkey and Iberia.
The North American and European markets have many similarities, Phadke noted. For example, plastics and polymer applications dominate in both regions. Polystyrene production is a major consumer of white oils in these regions, as are thermoplastic elastomers, low-density polyethylene and polyvinyl chloride.
White oils are used in a myriad of health and beauty products, such as suntan lotions, sunscreens, emollients and hot melt adhesives.
In the pharmaceuticals industry, white oils are used in various excipients, laxatives and ointments, as well as in the manufacturing of medical equipment. The food industry uses white oils as release agents and to formulate food-grade lubes. Other applications include textiles, agricultural sprays, fertilizers and defoamers.
Low- and medium-viscosity grades are commonly preferred in health and beauty products, while heavier grades are primarily used in industrial applications. Despite these similarities, Phake pointed out that the supply situation in Europe and the U.S. is quite different.
Primary suppliers of white oils in Europe are ExxonMobil, H&R Group, PertroCanada, Sonneborn and Nynas. Though saturated, Europe offers room for new suppliers with differentiated products and attractive pricing, he said.
Major North American suppliers are Calumet Penreco, Sonneborn and PetroCanada. North America has overcapacity and its leading suppliers have a strong market position. Existing companies are entrenched with customers, and barriers to entry for new suppliers are high, he said.
Kline found overall white oil demand is driven by economic growth rates in a particular region. Asia-Pacific will enjoy a higher growth rate because many end-use industries are migrating to that region from Europe and North America, Phadke said.
The polystyrene market will decline due to substitution by other polymers and processing improvements that reduce overall demand. Other segments, such as health and beauty, hot melt adhesive, pharmaceuticals and food, will provide moderate growth. In addition, competition from other materials like waxes will reduce some of the growth.
Competition is increasing in every market between participants at different points of the supply chain – base oil producers, white oil producers, blenders and importers. In addition, reduced supply of API Group I oils and competition from Group II and III will drive substitution. However, Phadke said, substitution will be slow because of the lengthy approval process.
The presentation was based on Klines on-going research. Global White Oils: Market Analysis and Opportunities, which is Klines first syndicated global report covering the white oils market, is scheduled to be published in the second quarter of this year.