Base oils are lubricant-grade oils. According to the method of obtaining them, they are divided into two categories: mineral base oils, which are obtained as a secondary product of crude oil refining, and synthetic base oils, which are formed with the help of chemical synthesis processes. Chemically, there are two types of base oils: paraffinic and naphthenic. According to their particular composition, their viscosity and their sulfur content, the American Petroleum Institute has segmented base oils into five groups: I, II, III, IV, and V. They are used in the production of lubricants for various industries. The automotive industry holds the key share in the global base oils market.
Segmentation of the Global Base Oils Market
Four product segments of base oils are analyzed: Group I, Group II, Group III, and others. Group I base oils held the dominant market position in 2013, and are expected to remain in the position till 2020. However, the trend of replacing Group I base oils with Group II base oils is expected to strengthen in North America and Europe. Meanwhile, increasing demand from developing regions such as Asia Pacific, Latin America, Russia, and the Middle East will drive the global demand for Group I base oils. However, growingly prevalent acceptance by the oil segment of the automotive industry will drive the market for Group II and III base oils.
These groups are further classified into various subcategories. Group I base oils are categorized as SN150, SN500, BS150, and others. Group II base oils are categorized into four segments: 150N, 500N, 600N, and others. Likewise, Group III base oils are classified as 4cSt, 6cSt, and others.
By application, the global base oil market is categorized into 6 segments: Automotive oils, industrial oils, process oils, hydraulic oils, metalworking fluids, and others. The first two categories held the major market share in 2013 and will remain the dominant segments. The automotive industry is expected to increase its demand for base oils as it expands into the developing economies of Asia Pacific and Latin America.
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The global base oil market is divided into five regional submarkets: North America, Europe, Asia Pacific, Middle East and Africa, and Latin America (Central and South America). North America and Europe are expected to be the first to switch from Group I base oils to Groups II and III, which yield higher performances. Rising demand from the booming construction as well as automotive industries in developing countries such as India, China, and Brazil is expected to raise the demand for Group I base oils in the Asia Pacific and Latin American regional markets.
Drivers and Restraints of the Global Base Oils Market
The expansion of the automotive industry, majorly in Europe and the USA, is a major driver of the global base oils market. The increasing automotive industry in China, which is expected by many analysts to soon eclipse those of many European countries, will also drive up the demand for base oils in the Asia Pacific market.
Another major driver is the expected increase of environmental regulations, which are already on the rise in Europe. These will bring about changes in the processes used to manufacture lubricants. The nascent gas-to-liquid technology is expected to provide unadulterated and highly efficient base oils. This will also open up new market opportunities.
The rapid spread of infrastructure and increasing development in countries such as India, China, Russia, Brazil, etc., will help the base oils market expand in these emerging markets.
The expected shift by oil producers to sour crude oil will hinder base oil production, but the repercussions caused by this change are expected to be successfully integrated into the market dynamics by 2020.
Key Players in the Base Oils Market
British Petroleum p.I.c., Exxon Mobil Corporation, Chevron Corporation, GS Caltex Operation, MOGoil GmbH, Petrochina Company Limited, etc., are some of the major players in the global base oils market.
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