Base Oil Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Base Oil Market is segmented by Type (Group I, Group II, Group III, Group IV, and Other Types), Application (Engine Oils, Gear Oils, Metalworking Fluids, General Industrial Oils, Greases, Process Oils, and Other Applications), and Geography (Asia-Pacific, North America, Europe, South America, and Middle-East and Africa).

Market Snapshot

Base Oil Market Bar Graph
Study Period: 2016 - 2026
Base Year: 2020
Fastest Growing Market: Asia Pacific
Largest Market: Asia Pacific
CAGR: >2.5 %
Base Oil Market Key Players

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Market Overview

The base oil market size was estimated at around 35 million metric tons in 2020, and the market is projected to register a CAGR of around 2.5% during the forecast period (2021-2026).

COVID-19 negatively impacted the market in 2020. The declining automotive industry and the temporary shutdown of automotive manufacturing units and various industrial units due to the pandemic scenario have declined the consumption of engine oil, gear oils, greases, and metalworking fluid, thus, creating a negative impact on the demand for base oil.

  • Over the short term, the major factor driving the market's growth is rapid industrialization in developing nations considering the industrial application of base oil such as hydraulic fluid and industrial gear oil.
  • On the flipside, automobile manufacturers focusing on engine downsizing and extended oil change intervals are likely to hamper the market's growth.
  • The Group I segment dominated the market, but it is likely to decline during the forecast period, owing to its replacement by Group II and Group III base oils.
  • The expanding production capabilities of base oils in developing countries are likely to provide opportunities for the market studied during the forecast period.
  • The Asia-Pacific region is expected to dominate the market and is also likely to witness the highest CAGR during the forecast period.

Scope of the Report

Base oils are categorized into five groups, i.e., Group I-V. The first three groups are derived from downstream petroleum refinery plants. Group IV base oils are synthetic (polyalphaolefins) oils. The base oil market is segmented by type, application, and geography. By type, the market is segmented into Group I, Group II, Group III, Group IV, and other types. By application, the market is segmented into engine oils, gear oils, metalworking fluids, general industrial oils, greases, process oils, and other applications. The report also covers the market size and forecasts for the base oil market in 15 countries across major regions. For each segment, the market sizing and forecasts have been done on the basis of volume (metric ton).

Type
Group I
Group II
Group III
Group IV
Other Types
Application
Engine Oils
Gear Oils
Metalworking Fluids
General Industrial Oils
Greases
Process Oils
Other Applications
Geography
Asia-Pacific
China
India
Japan
South Korea
Rest of Asia-Pacific
North America
United States
Canada
Mexico
Europe
Germany
United Kingdom
France
Italy
Rest of Europe
South America
Brazil
Argentina
Rest of South America
Middle-East and Africa
Saudi Arabia
South Africa
Rest of Middle-East and Africa

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Key Market Trends

Engine Oil Segment to Dominate the Market Demand

  • The engine oil segment dominates the demand for base oil due to the growing demand for engine oil from industries such as automotive, power, heavy equipment, metalworking, chemicals, and others.
  • Engine oils are widely used to lubricate internal combustion engines and are composed of 75-90% base oils and 10-25% additives.
  • They are typically used for applications, such as wear reduction, corrosion protection, and smooth operation of the engine internals. They function by creating a thin film between the moving parts for enhancing heat transfer and reducing tension during the contact of parts.
  • The automotive industry stands to be the largest consumer of engine oil. Currently, high-mileage engine oils are in demand in the automotive industry, owing to the properties that help in oil leak prevention and reduction in oil-burn offs.
  • Up to Q3 of 2019, about 67.47 million vehicles were produced globally and reached about 52 million vehicles up to Q3 of 2020, registering a decline rate of about 23%. Thus, this led to a decrease in the demand for engine oils, which, in turn, negatively impacted the market growth of base oil.
  • Most light and heavy vehicle diesel and gasoline engines use 10W40 and 15W40 viscosity grade oils globally. As of Q3 2019, about 15.37 million light commercial vehicles were produced globally and has reached about 11.79 million till Q3 2020, registering a decline rate of about 23.2%, thus led to a decrease in the demand for engine oils, which in turn negatively impacted the market growth of base oil.
  • Therefore, the aforementioned factors are expected to impact the base oil market in the coming years significantly.
Base Oil Market Share

Asia-Pacific Region to Dominate the Market

  • The Asia-Pacific region dominated the global market share. The rising investments in the region by multinational companies, the growing industrial sector, and high demand for gear oil, grease, etc., from industries, such as heavy equipment, power, and metalworking, are some of the key drivers for the base oil market in the region.
  • China, the world’s largest automotive producer, is majorly focusing on increasing the production and sale of electric vehicles in the country. As of Q3 2019, China had produced 18.17 million vehicles and reached 16.96 million vehicles by Q3 2020, registering a decline rate of about 6.66%, which, in turn, negatively impacted the demand for the regional base oil market.
  • Besides, countries such as India, Indonesia, Malaysia, and Thailand have also been witnessing a decline in the production of vehicles in the region as of the third quarter of 2020. Hence, all such trends in the automotive industry in the region are expected to show a significant impact on the base oil market in the coming years.
  • As of Q3 2019, India had produced 3.5 million vehicles and reached 2.16 million vehicles by Q3 2020, registering a decline rate of about 38%, which, in turn, negatively impacted the demand for the regional base oil market.
  • In addition, growing investments in the construction sector are anticipated to boost the demand for lubricants used in construction activities and in heavy equipment.
  • Countries like India, China, the Philippines, Vietnam, and Indonesia have been witnessing growth in the construction industry considering the post-COVID scenario. Investments in residential and commercial construction in these countries have been increasing at a robust rate. This is further expected to increase the demand for base oil in construction applications in the coming years.
  • Therefore, the aforementioned factors are expected to impact the base oil market in the coming years significantly.
Base Oil Market Growth By Region

Competitive Landscape

The base oil market is a highly fragmented market, where numerous players hold insignificant shares to affect the market dynamics individually. Some of the noticeable players in the market include Exxon Mobil Corporation, Royal Dutch Shell PLC, China Petroleum & Chemical Corporation, Evonik Industries AG, and Chevron Corporation, among others.

Recent Developments

  • In April 2020, GP Global announced the acquisition of the assets from Grand Petroleum, which include lubricants brand HiSpeed, storage tanks with a capacity of 6,000 kiloliters, and lubricants blending plant with an annual capacity of about 50,000 metric ton in Lagos of Nigeria. It will also strengthen the base oil market of GP Global by leveraging on the storage and ability to import premium base oils for distribution.
  • In November 2019, Indian Oil Corporation Ltd announced to invest about INR 1000 Crore to double the Group III base-oil production by 270 kiloton per year at the Haldia refinery facility based in West Bengal, India.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Drivers

      1. 4.1.1 Rapid Industrialization in Developing Nations

      2. 4.1.2 Other Drivers

    2. 4.2 Restraints

      1. 4.2.1 Automobile Manufacturers Focusing on Engine Downsizing and Extended Oil Change Intervals

      2. 4.2.2 Declining Demand for Group I Base Oils

      3. 4.2.3 Detrimental Impact of COVID-19

    3. 4.3 Industry Value Chain Analysis

    4. 4.4 Porter's Five Forces Analysis

      1. 4.4.1 Bargaining Power of Suppliers

      2. 4.4.2 Bargaining Power of Consumers

      3. 4.4.3 Threat of New Entrants

      4. 4.4.4 Threat of Substitute Products and Services

      5. 4.4.5 Degree of Competition

  5. 5. MARKET SEGMENTATION (Market Size by Volume)

    1. 5.1 Type

      1. 5.1.1 Group I

      2. 5.1.2 Group II

      3. 5.1.3 Group III

      4. 5.1.4 Group IV

      5. 5.1.5 Other Types

    2. 5.2 Application

      1. 5.2.1 Engine Oils

      2. 5.2.2 Gear Oils

      3. 5.2.3 Metalworking Fluids

      4. 5.2.4 General Industrial Oils

      5. 5.2.5 Greases

      6. 5.2.6 Process Oils

      7. 5.2.7 Other Applications

    3. 5.3 Geography

      1. 5.3.1 Asia-Pacific

        1. 5.3.1.1 China

        2. 5.3.1.2 India

        3. 5.3.1.3 Japan

        4. 5.3.1.4 South Korea

        5. 5.3.1.5 Rest of Asia-Pacific

      2. 5.3.2 North America

        1. 5.3.2.1 United States

        2. 5.3.2.2 Canada

        3. 5.3.2.3 Mexico

      3. 5.3.3 Europe

        1. 5.3.3.1 Germany

        2. 5.3.3.2 United Kingdom

        3. 5.3.3.3 France

        4. 5.3.3.4 Italy

        5. 5.3.3.5 Rest of Europe

      4. 5.3.4 South America

        1. 5.3.4.1 Brazil

        2. 5.3.4.2 Argentina

        3. 5.3.4.3 Rest of South America

      5. 5.3.5 Middle-East and Africa

        1. 5.3.5.1 Saudi Arabia

        2. 5.3.5.2 South Africa

        3. 5.3.5.3 Rest of Middle-East and Africa

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Mergers and Acquisitions, Joint Ventures, Collaborations, and Agreements

    2. 6.2 Market Share/Ranking Analysis**

    3. 6.3 Strategies Adopted by Leading Players

    4. 6.4 Company Profiles

      1. 6.4.1 Abu Dhabi National Oil Company

      2. 6.4.2 Chevron Corporation

      3. 6.4.3 China Petroleum & Chemical Corporation

      4. 6.4.4 CNOOC Limited

      5. 6.4.5 Eni SpA

      6. 6.4.6 Evonik Industries AG

      7. 6.4.7 Exxon Mobil Corporation

      8. 6.4.8 Formosa Petrochemical Corporation

      9. 6.4.9 Gazprom Neft PJSC

      10. 6.4.10 GP Global

      11. 6.4.11 GS Caltex Corporation

      12. 6.4.12 Indian Oil Corporation Ltd

      13. 6.4.13 LUKOIL

      14. 6.4.14 NESTE

      15. 6.4.15 Nynas AB

      16. 6.4.16 Petrobras

      17. 6.4.17 PETRONAS Lubricants International

      18. 6.4.18 Philips 66 Company

      19. 6.4.19 Repsol

      20. 6.4.20 Royal Dutch Shell PLC

      21. 6.4.21 Saudi Arabian Oil Co.

      22. 6.4.22 Sepahan Oil

      23. 6.4.23 SK Lubricants Co. Ltd

      24. 6.4.24 S-OIL CORPORATION

      25. 6.4.25 Total

    5. *List Not Exhaustive
  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

    1. 7.1 Expanding Production Capabilities in Developing Countries

    2. 7.2 Innovation in the Field of Renewable Base Oils

**Subject to Availability

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Frequently Asked Questions

The Base Oil Market market is studied from 2016 - 2026.

The Base Oil Market is growing at a CAGR of >2.5% over the next 5 years.

Asia Pacific is growing at the highest CAGR over 2021- 2026.

Asia Pacific holds highest share in 2020.

Exxon Mobil Corporation, Royal Dutch Shell plc, Evonik Industries AG, Chevron Corporation, China Petroleum & Chemical Corporation are the major companies operating in Base Oil Market.

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