Transformer Oils Market Intelligence

Industry Outlook & Drivers

Transformer Oils Global Market Outlook 

• Asia Pacific will continue to dominate the market in terms of growth prospects through to 2020
• Increasing demand for electricity in the emerging and developed countries, along with the increasing infrastructure investment for energy access is expected to drive the transformer oil market globally. Also, replacement of ageing transformers in North America and Europe is expected to further drive the market

Global Market Size –Transformer Oil 

• Power industry growth to drive the demand for transformer oil : The transformer oil market is expected to grow at a CAGR of 8.30 percent from 2017-2022 mainly driven by the increased demand from the T&D sector of power industry
• Significant growth is expected to come from the increasing demand for oil-filled transformers on account of increasing energy demand and increasing electrification and increased industrial usage in developing economies
• Asia-Pacific (especially China and India) is expected to lead the global transformer oil market in the next 5 – 8 years due to the need for improving the rural and urban development infrastructure

Global Transformer Oil Supply-Demand Analysis 

• Higher growth in transformer oil capacity due to the developing markets: Transformer oil growth in developing markets is expected to be higher as more demand is coming from new transformers in these markets. Demand from revamping of old transformers in developed markets will be comparatively lower to new transformers

• Developing countries to drive the demand for transformer oil: The demand for transformer oil in developing nations like China, India and Brazil is expected to be largely driven by the installation of new electrical infrastructure due to the increasing population and building better infrastructure
• Revamping activities to increase the demand in developed nations: In developed nations like US and Europe, significant investments in infrastructure were made during 1960-1980, and transformers have reached their lifetime (40 years). Therefore, a lot of revamping of the existing facilities were expected to fuel the demand for transformer oil in these regions
• Large scale end-use players are direct buyers: Small quantity of transformer oil is sold through distributors and marketers. However, a large quantity is directly sold from the refiners to electrical distributors or transformer makers. Going forward, during 2017-2018, the demand for transformer oil is expected to put pressure on the supply leading to higher utilization of suppliers and capacity additions/expansions

Global Transformer Oil Demand by Application

• Major demand driver for transformer oil is from the OEM and that is expected to drive the demand in the near future. The market for utility demand in higher in developed markets due to the ageing infrastructure of transformers
• Demand for transformers is expected to grow at a CAGR of 7-8 percent: The transformer OEM contributes about 85 percent of the global transformer oil demand. Going forward, the demand is expected to increase owing to the robust transformer demand from developed and developing nations alike
• About 12 percent demand for transformer oil is derived from electrical utility companies that utilizes the transformer oil for maintenance of the existing transformers and upgrading power grids. Demand from this sector is also expected to grow with ageing transformers (primarily in the developed markets)
• Dielectric transformer oil is used in capacitors and contributes about 3 percent of the total transformer oil demand on a global level However, this type of capacitors, currently, are being replaced with solid state capacitors that offer superior performance and reliability. Therefore, demand from this sector is expected to dwindle going forward
• In 2016-17, there was an increase in the sales of used transformer oils for re-use in transformers (after refining for impurities) in developed markets like the US

Global Transformer oil production by category

• Mineral-based transformer is the market leader for transformer oil production and is expected to be the leader in 2020, mainly due to the established value chains and operational benefits. The alternate forms of transformer oil are also making strides in transformer markets owing to their environmental friendly characteristics.
• Mineral-based transformer oil has two types – Naphthenic and Paraffinic. The naphthenic type supply is higher in the global market due to the maturity of developed markets but the growth of the paraffinic type is expected to be higher due to the increase in demand from the developing markets
• There have been numerous environmental issues with mineral-based transformer oil due to production and end-of-life disposal. This has led to an increase in development of alternate types of transformer oil, i.e. silicone based and bio-based
• Many companies, like Dow Corning, Cargill (silicone-based) and Novvi-Chevron (bio-based), are focusing on alternate types of transformer oil due to their environment benefits; but, due to limited usage benefits as compared to mineral-based oil, their market share is expected to increase marginally