Base Oil Market: Diverse Groups & Leading Application

By Shruti Vanjare

All lubricants comprise a base oil that serves as the fluid’s foundation before blending with a thickener or additives. While they are most commonly found in industrial and automotive applications, base oils are also utilized for a variety of purposes, including bio-medical applications, cooking, ultrasound and medical exams, among others.

Base oils find the majority of their applications in automotive products, including transmission and gear lubricants, engine oils, and greases. Hence, the increasing demand for high-grade oils in the automotive industry, in addition to a diverse range of applications among various end-users, is set to raise the demand for base oil, consequently fueling its market growth.

According to Inkwood Research’s analysis, the global base oil market is predicted to grow with a CAGR of 3.12% in terms of revenue and 3.65% in terms of volume during the forecasted years of 2022 to 2030. This is attributed to the stringent environmental legislation leading to strict performance standards and fuel efficiency in automobiles.

What are the Diverse Base Oil Classifications?

As per the American Petroleum Institute (API), base oils can be classified into five key categories, with the first three groups refined from petroleum crude oil. The distinction is based on the base oil’s chemical composition and its treatment process.

Group I – As the least refined base oil, group I base oils comprise less than 90% saturates and greater than 0.03% sulfur. Moreover, their viscosity-index ranges between 80 to 120. Since group I base oils are solvent-refined, characterized as a simpler refining process, they are the most-affordable base oils in the market.

• Applications: Group I base oils are majorly used in marine, automotive, as well as rail lubricants on account of their simple processing, affordability, low volatility, high viscosity index, and lubrication properties.
• Market Position: The group I segment, under the group category, is set to dominate the global market.

Group II – Group II base oils contain more than 90% saturates and less than 0.03% sulfur while delivering a viscosity index range of 80 to 120. With improved anti-oxidation properties compared to group I oils, group II oils are more expensive and are manufactured via a complex process termed hydrocracking.

• Applications: Largely considered mineral oils, group II base oils are commonly used in automotive engine oil formulations.
• Market Position: Group II is expected to be the fastest-growing group, progressing with a CAGR of 4.85% during the forecast period.

Group III – While these oils must meet the same conditions in terms of sulfur and saturates as group II, they must also have a viscosity index greater than 120. Group III base oils are severely hydroisomerized, hydrocracked, and hydrotreated in order to formulate the best grade of petroleum base oil.

• Applications: Group III base oils promote fuel efficiency and help reduce CO2 emissions, as well.

Group IV – Group IV base oils entail synthetic base oils comprising polyalphaolefins (PAOs). This group has a viscosity index of 125-200, with a broader temperature range.

• Applications: These oils are ideal for use in extremely cold conditions as well as high heat applications.

Group V – With the greatest variety, group V is the comprehensive category for all other base oils, including polyesters, diesters, silicones, phosphate esters, biolubes, naphthenic oils, and others.

• Applications: These base oils can be combined with other base stocks in order to enhance the oil’s properties.

Base Oil Applications: Automotive Oil is a Promising Avenue

Automobile and truck engines are among the largest consumers of lubricants across the globe. For instance, according to the Organisation Internationale des Constructeurs d’Automobiles (OICA), the total automobile production globally increased to 80.145988 million units in 2021 from 77.621582 million units in 2020.

The number is further projected to rise, subsequently increasing the demand as well as the adoption of advanced and novel automotive oils. Moreover, as per our analysis, this factor also plays an integral role in positioning automotive oil, under the application category, as the dominating segment with a revenue share of 46.56% in 2021.

Furthermore, key players operating in major regions such as North America and Asia-Pacific are also launching high-grade products and undertaking a range of strategic initiatives aimed at boosting base oil developments.

For example:

• In 2022, Safety-Kleen, a United-States-based recycler of used oil, launched KLEEN+™. The new family of base oil grades is set to redefine the market by minimizing the environmental impact of industrial as well as automotive lubricants.

• Shanxi Lu’An Taihang Lubricants Co Ltd started a large Chevron-licensed ISODEWAXING® unit in 2019 at a coal-to-liquid base oil plant in northern China, in Shanxi Province.

• Cosmo Oil Lubricants Co Ltd (Japan) obtained the Biomass Mark certification for its product, COSMO DIESEL CARBONEUT 10W-30, a bio-based diesel engine oil.

There have also been notable expansions in base oil production facilities across emerging nations, such as China, expected to have a positive impact on the market growth in the Asia-Pacific. This factor, as per our evaluation, also contributes to the Asia-Pacific being the fastest-growing and dominating region, in terms of both revenue and volume, during the forecast period.

Aligning with this, in 2022, Sinopec Maoming Petrochemical Company, headquartered in China, announced the production of poly alpha-olefin, with an annual capacity of 12,000 tons. Such developments are anticipated to further boost the production capacities of base oil, thereby set to promote the growth of the global base oil market over the upcoming years.