Base Oil Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Base Oil Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The base oil market size was estimated at around 30 million liters in 2021, and the market is projected to register a CAGR greater than 2% during the forecast period (2022-2027).

Fueled by the pandemic, the declining automotive industry and the temporary shutdown of automotive manufacturing and various industrial units have resulted in lower consumption of engine oil, gear oil, greases, and metalworking fluid, putting downward pressure on base oil demand. In 2021, however, the market grew slightly as car manufacturing increased. According to OICA, global automobile manufacturing climbed by 9% in the first nine months of 2021 compared to the same period in 2020.

• Over the short term, the primary 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.
• Conversely, automobile manufacturers focusing on engine downsizing and extended oil change intervals will likely hamper the market's growth.
• As EVs make their place in the market, the use of engine oils is expected to decrease; this is likely to hinder the market growth in the coming years.
• 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 will likely provide opportunities for the market studied during the forecast period.
• The Asia-Pacific region is expected to dominate the market and will also witness the highest CAGR during the forecast period.

• 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.
• According to OICA data, the global production of automotive vehicles in the first nine months of 2021 has recorded 57,262,777 units compared to 52,146, 292 units in the first nine months of 2020.
• Global automobile sales were somewhat higher in most major regions of the world in the entire year 2021. With sales increased 6.6 percent to more than 21 million cars, China remained the world's largest and best-performing major single-country auto market.
• Car sales in India expanded at a fast rate of 27%, although the entire vehicle market remained relatively small in size. In 2021, new passenger car registrations in Japan and Europe were lower, while the market for light vehicles in Russia, United States, and Brazil grew marginally.
• As a result, the aforementioned factors are anticipated to influence the engine oil market in the future years substantially.

• The Asia-Pacific region controlled the majority of the worldwide market share. With rising investments in the automobile sector in Malaysia, India, and Thailand. For instance, MG, a British brand owned by China's SAIC Motors and created in partnership with Thailand's Charoen Pokphand Group, is targeting Thailand with its first-ever pickup truck, the "Extender," which is expected to boost engine oil consumption in the area over the projection period.
• China's annual automobile sales reached 21,090,200 units in 2021, according to the German Association of the Automotive Industry, making it the world's largest market.
• In 2021, India's new automobile sales grew by 26.7 % to 3,082,400 vehicles, up from 2,435,100 in 2020 making it one of the large worldwide markets that grew at a faster rate. Even though automobile sales in India increased in 2019, the market was still roughly 10% lower than in 2018 and 2017.
• In 2021, new automobile sales in Indonesia, Thailand, Malaysia, Vietnam, the Philippines, and Singapore reached 2.79 million cars, up 14% from 2020, with Indonesia leading the way with a 67 % increase.
• As a result, the aforementioned factors are projected to have a substantial influence on the base oil market in the approaching years in the region.

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 (not in any particular order) include Exxon Mobil Corporation, Royal Dutch Shell PLC, China Petroleum & Chemical Corporation, Evonik Industries AG, and Chevron Corporation, among others.

• The market estimate (ME) sheet in Excel format
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