Transparency Market Research observes that the competitive landscape in the base oil market is quite fragmented due to strong presence of numerous international and national players. Some of the leading players in the global market are Exxon Mobile Corporation, SK Lubricants Co. Ltd., Chevron Corporation, and Royal Dutch Shell plc. To surpass the competitors, players are emphasizing on product diversification and expanding their product portfolio. Additionally, the market is also likely to witness mergers and acquisitions as players work toward expanding horizons.
The research report states that the global base oil market is expected to be worth US$ 30.9 bn by the end of 2020, as the global market is estimated to register a CAGR of 1.4% during the forecast period of 2015 and 2020. The demand for Group I has always been high. However, this trend is expected to change towards the end of the forecast period as consumer realize the superior quality of Group II and Group III base oils. Geographically, Asia Pacific is expected to dominate the global base oil market due to the high demand for the same in the emerging economies India and China. In 2014, Asia Pacific held a share of 41.4% in the global market. Analysts expect the trend to continue in the coming years as well.
Booming Automotive Sector to Accelerate Growth of Global Base Oil Market
Growth of automotive manufacturing in the emerging economies Brazil, India, and China has made a drastic difference in the consumption of base oil in recent years. The demand for base oil is essentially being driven by production and increasing usage of automobiles. The overall automotive industry has been the key consumer of finished lubricants, which extensively uses base oil. The reports also states that the rapid pace of industrialization in the developing parts of the world and increasing uptake of better products are also likely to have a positive impact on the global base oil market. The tightening grip of emission standards has shifted attention toward group VI base oil and naphthenic, which are superior quality base oils.
The growing efforts made by both developed and developing economies to reduce their carbon footprints has led to the surge in the demand for less harmful lubricants. This trend is largely attributable to the change in formulation of base oils. Thus, production of vehicles that comply with new emission standards has forced automobile manufacturers to use superior quality of base oils. All of these factors have collectively led to the growth of the global base oil market in recent years.
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On the flip side, the global base oil market is being negatively impacted by the declining crude oil prices. The shift toward sour and heavy crude oil are also expected to restrain the growth of the global market. Furthermore, increasing development, commercialization, and uptake of electric vehicles is expected to tug the market for base oil in the opposite direction. Growing awareness about hazardous impact of vehicles on the environment is projected to restrain the global base oil market in many indirect ways.