Base Oil - Group II Market Intelligence

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Are you looking for answers on Base Oil - Group II category?

Are you looking for answers on Base Oil - Group II category?

  • What are the key trends in Base Oil - Group II category?
  • Am I paying the right price?
  • Am I working with the right supplier?
  • What are the major challenges and risks in Base Oil - Group II industry?
  • How is Base Oil - Group II industry performing?

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Report Coverage

  • Global Capacity–Demand Analysis
  • Global Trade Dynamics
  • Regional Market Snapshot-North America, Europe, Asia
  • Cost Structure Analysis

Production Size

CAGR

3 Percent

Production Size North America

8.3 MMT

Production Size Europe

0.6 MMT

Production Size Asia Pacific (APAC)

11.3 MMT

Table of contents

  1. Base Oil - Group II Executive Summary
  2. Supply Market Outlook
  3. Demand Market Outlook
  4. Industry Best Practices
  1. Base Oil - Group II Market Analysis
  2. Global Market Size: Base Oils
  3. Global Market Outlook:
  4. Demand-Supply trends and forecast
  5. Key End-use Industries
  6. Trade Dynamics
  7. Regional Market Outlook [NA, EU, Asia]:
  8. Regional Market Snapshot
  9. Demand-Supply Trends and Forecast
  10. Trade Dynamics
  1. Base Oil - Group II Industry Analysis
  2. Porters Analysis
  3. Industry Drivers and Constraints
  4. Industry Events
  1. Base Oil - Group II Cost and Pricing Analysis
  2. Cost and Price Analysis:
  3. Cost Structure Analysis
  4. Price Forecast Base Oils
  1. Base Oil - Group II Supplier Analysis
  2. Global Capacity Share by Suppliers
  3. Regional Capacity Share
  4. Exhaustive Supplier List
  5. Detailed Supplier Profiling and SWOT Analysis
  1. Base Oil - Group II Industry Best Practices
  2. Sourcing Models and Widely Followed Industry Practices

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Global Base Oil Market Outlook

  • Global, group II base oil market is expected to grow at a CAGR of 3 percent till 2023

–The robust demand growth from Asia, especially industrial segment is expected to drive the growth for base oil and demand for industrial area is expected to grow at a CAGR of around 4 percent

  • The industrial lubricants sector is the second largest base oil consuming segment in the global market
    –Increasing mining activities in the Asian market is expected to drive the demand for group II base oils
  • The base oil price outlook ( Q3 2019 vs. Q2 2019): N.A.: 5–6 percent decrease, E.U.: 5–6 percent decrease, Asia: 5–6 percent decrease.
  • The major base oil market and share: N.A.: 39 percent, E.U.: 3 percent, Asia: 56 percent, and Others: 1.2 percent.
  • Base oil market report suggests that top sellers release the base oil market price based on the previous month’s prices and current month’s market dynamics.
  • Contracts are fixed during the early or mid of the month and the same is continued for two months. These are later released via public domain or IPROs, which are used as reference by other market participants for further negotiations.

market-trend-base-oil

Demand Market Outlook

  • The global group II base oil market has excess capacity and is expected to further increase in the next 2-3 years due to capacity additions, mainly in Asia
  • Major demand is expected from Asia and the US market since most of the derivative units (industrial, automobile and metal processing) are lined up in Asia. The automobile (2-3 percent growth) and the mining sector (3 percent growth) would be the key segments driving the demand. Around 1.5 MMT capacity additions are planned for lubricant production

Global Market Size-Group II Base Oils

  • Global group II base oil market is expected to grow at a CAGR of 3 percent mainly driven by increased demand for clear and high efficiency lubricants in the western markets and demand from industrial lubricants in Asian countries
  • Significant growth is expected to come from automobile sector due to consistent increase in vehicle production in the global market
  • Demand from the Asian industrial segment is expected to grow at a CAGR of 3-4 percent mainly driven by mining activities in China, Mongolia and Australian markets

Global Trade Dynamics

  • South Korea and Singapore remain as net exporters in Asian market: Low feedstock cost and low demand for group II base oils in the domestic market made these countries net exporters to Europe and other Asian countries

  • Europe remains a net importer, due to the non-availability of feedstock and low production in the region: Changing dynamics in the Western markets has resulted in increased usage of group II base oils in all the major downstream sectors (automobile, Industrial, process, and metalworking lubricants). This has left fewer base oils for other derivatives, turning Europe into a net importer. This trend is expected to continue for the next five years

 Global Capacity-Demand Analysis

  • Consistent shift towards highly pure base oils has led to increase in group II capacities: Rising environmental concerns and regulations proposed by OEM's have consistently increased the demand for group II base oil demand. Moving forward the same trend is expected to continue due to the improved demand from automotive segment from developing countries

Market Outlook

  • Demand for light vehicles to grow at a CAGR of 3-4 percent: Increasing light vehicle sales is expected to drive the demand for automobile lubricants through 2020
  • Group II capacity additions are planned in Asia and US: Changing dynamics in the US resulted in almost 30 percent of the players switching from group I to group II capacities. The US is expected to remain a net exporter with excess group II supply in the domestic market

Engagement Outlook

  • One year contract with quarterly price revisions: In the US and Europe, players can engage with year long contract with quarterly price revisions
  • Spot buying is preferred in Asia: In Asia, spot buying is mostly preferred, since the consumers buy group II base oils and convert it in house for their personal care applications
  • Bulk cargo shipments are preferred for contract buying: CPG players can buy their volumes in bulk at one stretch to save ocean freight charges and increase volume discounts

Market Overview

  • The base oil market report shows that surplus supply in the U.S. market makes it a best sourcing destination for European and Asian base oil market.
  • In North America, Group II can be substituted with group III in machinery and engine oil applications. However, intensive processing the production cost thus incurred, would weigh down the advantage of moving to Group III from Group 1 base oil.
  • Since Group II base oils are produced though hydrocracking at varying boiling points ranging from 300 degree Celsius, gas is used as a burning agent in the refineries. Hence, gas prices play a major role in deciding the base oil market price

Global Demand by Application

Group II base oil finds its end-use application in CPG in the form of solvents used in the production of cosmetics and personal care products. Growing demand (CAGR of 3–4 percent) from large volume buyers, like industrial and process oils in the Europe market, are expected to pose supply threat to small volume CPG players

Downstream Demand Outlook

  • Demand for automobile lubricants to grow at a CAGR of 2-3 percent: Due to increasing light vehicle sales in developed regions and heavy-duty containers sales in the developing regions, demand for auto lubricants is expected to increase during the next five years

  • Demand for metalworking fluids is likely to increase due to an increase in mining activities in the US market. The mining industry has been showing tremendous growth in the North American market and it is expected to grow at a CAGR of 3 percent till 2023

  • Process oil is expected to grow at a CAGR of 2-3 percent: Investments planned in rubber production is expected to increase the demand for process oil during the next five years

Industry Drivers and Constraints

Drivers

Demand from automobile lubricants will drive the demand for Group II base oils for the next 3-4 years. Shift towards cleaner fuels and cleaner industrial lubricants from western markets to drive the demand for Group II base oils

Growth in industrial lubricants segment

  • Industrial lubricants segment is expected to grow at a CAGR of 2-3 percent across the world, which is likely to pull the demand for Group II base oils

Firm demand from mature markets

  • North American and European markets which consume Group II mainly for auto lubricants production is expected to pose steady demand for Group II base oils, due to the healthier base oil to lubricants conversion margins

Constraints

Shift to lighter feed slate

  • Due to the LPG revolution in Europe, many cracker units have switched to cheaper ethane as feedstock rather than conventional naphtha, which has reduced the production of lower cuts in the Europe market

High-temperature hydrocracking unit has to be installed: 

  • For producing group II base oils, a higher level of hydrocracking is required. All the refiners are not upgraded with the facility. The capital investment involved with maintenance issues makes most of the refiners reluctant to install these units.

  • Across the globe, 20 refiners are upgraded with this facility. Hence players who are forward integrated with lubricant (Independent lubricant blender) production only have this Group II production facility

 

Why You Should Buy This Report 

  • The base oil market report gives the cost structure and price analysis of Group 2 base oil.
  • It gives the supplier trends, global share, key profile and does a SWOT analysis of major base oil suppliers like Chevron Phillip, Exxon Mobil, Sinopec, LyondellBasell, etc.
  • The report lists out the key drivers and constraints and does Porter’s five force analysis of North America, Europe, and Asia base oil market.
  • It lists out the key technological trends and innovations for base oil markets.

Base Oil - Group II Market Frequently Asked Questions

  1. Who are the major players in the base oil industry?
  2. As per Beroe’s base oil market analysis, the major players in the global base oil market are North America (39%), EU (3%), Asia (56%), and other countries (1.2%).

 

  1. What are the latest trends in the base oil market? 
  2. Beroe’s base oil report highlights certain base oil price trends as well as market updates. As per the report, a huge demand is expected from the industrial segment in Asia. Considering the industrial lubricants sector is one of top consumers of base oil, rise in mining activities is considered to drive the demand. A considerable demand is also expected to come from the automobile sector due to a rise in vehicle production. A sustained shift towards pure base oils has created a rise in group II quantities.

 

  1. What will be the expected growth of the base oil industry?
  2. The global base oil market is expected to grow at a CAGR of 3 percent by 2022. 

 

  1.  What are the key drivers of the base oil market?
  2. As per Beroe’s base oil market analysis, major demand is expected to arise from Asia and the US as most of the derivative units, including industrial, automobile, and metal processing are located in Asia. The automobile and the mining sector with a growth of 2-3% and 3% respectively are expected to be the key segments propelling the demand. Automobile and lubricant sectors are expected to drive a significant amount of demand.

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