Bio Base Oils Market Trends Demand Volume Overview Analysis 2023-2030

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Bio Base Oils Market Trends Demand Volume Overview Analysis 2023-2030

February 27
15:31 2023
Bio Base Oils Market Trends Demand Volume Overview Analysis 2023-2030
DataM Intelligence
Bio Base Oils Market is expected to growing at a CAGR of 25.1% during the forecast period (2022-2030).

BIO BASE OILS MARKET DYNAMICS:

The increased utilization of base oils across the automotive sector is a major market driver for the global bio base oils market. However, the high cost of raw materials could be a major market restraint.

The increased utilization of base oils across the automotive sector

The growing demand for high-grade base oils for automotive industry is expected to fuel the growth of the base oils market in coming years. The growing demand for motor oils and lubricating greases compatible with fast-moving parts and high temperatures is driven by engine technology advances. Furthermore, these engine oils retain viscosity, reduce engine wear and help ensure dependability are made with a high-quality base oil and best-in-class additive technology. Thus, the growing utilization of base oils across the automotive industry is estimated to drive market growth.

 

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In addition, the increasing adoption of Group II and Group III base oils, coupled with rapid industrialization across the globe, is further propelling the growth of the base oil market. The rising applications from developing economies and emerging markets drive market value growth. Base oils such as Groups II and III are suitable for use in lubricant formulations for automatic transmission engines, heavy-duty trucks and passenger automobiles and various properties of Group II and III base oils are projected to bolster the growth of the market. Thus, the rapid growth in the automotive industry, revenue and launches and demand for automotive products increases the demand for base oils for greater efficiency, which adds to the market growth.

For instance, according to Carsurance, Volkswagen Group had the highest automotive industry revenue in 2019, US$ 278.34 billion. For instance, in 2020, according to Carsurance, U.S. motor vehicle and parts retail trade revenue was US$ 1.25 trillion and by 2030, the global automotive industry revenue will reach almost US$ 9 trillion

High cost of raw materials

Plant based oils are composed of triglycerides derived from plants; though plant parts may yield oil, for commercial practices, Plant-based oil is essentially derived from the seeds. The costs associated with the manufacturing of base oils mainly depend on the raw material availability, the type of raw material, the strict methods & measures used for extraction and the intended use of the plant for the production of based oil.

In addition, the biofuel guidelines have resulted in a lack of accessibility to soybean and rapeseed oil in U.S. and Europe for food and other industrial applications. Furthermore, the consequential high prices of these prime sources of plant-based oils have resulted in working capital shortages and may hamper market growth.

 

COVID-19 IMPACT ANALYSIS ON BIO BASE OILS MARKET:

The recent outbreak of coronavirus had a negative impact on the bio base oil market. The COVID-19 pandemic has harmed the base oil market by reducing consumption oversupply of refined petroleum products and slowing economic development due to various global lockdown measures.

The complete lockdown imposed by the government of various countries worldwide during the pandemic has resulted in supply chain disruptions that significantly hampered the sourcing of feedstocks. Additionally, the factors such as the temporary shutdown of production facilities, the decline in labor force participation and investment withdrawals, followed by norms of social distancing, have adversely affected the market. In addition, the COVID-19 pandemic has halted more than 80% of North American automobile production. Additionally, a similar situation exists in Europe and Asia Pacific, as the demand for cars and commercial vehicles witnessed a declining growth, thus hampering the overall market growth.

Furthermore, the industrial sector has changed dramatically since December 2019 due to the COVID-19 pandemic, which has caused extreme economic uncertainty and the early signs of global economic fallout are visible in countries severely affected by the contagion. The market is projected to continue growing at the same pace as the pre-pandemic levels. Moreover, the suspended and canceled operations will continue and as a result, the market is estimated to expand and as a result, the market will flourish over the forecast period.

 

BIO BASE OILS MARKET SEGMENT ANALYSIS:

The global bio base oil market is classified based on type, application and region.

The extensive expansion of the automotive sector provided a lucrative market demand for automotive oils, thus allowing the respective segment to dominate the application segment of the global bio base oils market

In order to reduce friction between the parts of the engine assembly and transmission, automotive oil is used in the transmission chamber and engine of the vehicle. The engine oil’s secondary purpose is to maintain the engine chamber’s temperature and stop oxidation from causing engine parts to rust. These oils are made from petroleum that has undergone additional processing to improve engine oil quality. One of the key factors propelling the growth of the automotive oil market is the global expansion of the automotive industry. Spark plugs are widely used in electrical, marine and aerospace applications, which benefits the market. The market is also influenced by the rising demand for conventional oil, which is more in demand because it is less expensive than modern lubricants. The popularity of synthetic lubricants can be attributed to their superior performance and long-lasting better protection. The automotive oil market is also benefited from the growth of the automotive industry, a surge in investments and rising disposable income.

Engine oils, frequently used to lubricate internal combustion engines, are primarily composed of basic oils (75%–90%) and additives (10%–25%). These additives are widely used in the automotive and other transportation sectors worldwide. Engine oil usage has three main advantages: improved engine performance, protection against corrosion and reduced wear and tear. In order to enhance heat transfer and reduce strain when the moving parts come into contact, these oils work by forming a thin coating between them.

The market is being driven by the quickly expanding automotive production across the globe due to the high demand for affordable and fuel-efficient vehicles and automotive technological advancements. The International Organization of Motor Vehicle Manufacturers (OICA) estimates that in 2021, automotive production will increase by 3% in China, 12% in Brazil, 30% in India and 4% in U.S. In 2021, vehicle sales were higher across major regions globally. China maintained its position as the world’s largest and best-performing single-country auto market, with sales rising 6.6% to more than 21 million vehicles. The FUCHS expanded its specialty business in June 2021 by acquiring Gleitmo Technik AB’s lubricants division. Its acquisition would increase the company’s customer base, product line and market expansion. A partnership for industrial lubricants in Australia was established under the terms of the MoU, which was signed in November 2020 with PT Pertamina.

 

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BIO BASE OILS MARKET GEOGRAPHICAL ANALYSIS:

The expanding population, rising disposable income, increasing investments in the region’s various industrial sectors and expanding automotive and energy industries boost the demand and sales of bio base oils in the Asia-Pacific

As the largest vehicle production hub, Asia Pacific is expected to be the fastest-growing area in terms of consumers. In addition, countries such as China, India, Indonesia and Thailand are progressively manufacturing and exporting passenger cars and other vehicles to developed regions, propelling the bio base oil market forward. According to the Organisation Internationale des Constructeurs d’Automobiles (OICA), the country will produce more than 25.22 million cars and commercial vehicles in 2020, growing to more than 26.08 million units the following year.

Because of favorable government regulations and inexpensive labor, relocating manufacturing operations to Asian countries is expected to increase vehicle spending and industrialization. In addition, a shift toward more sustainable, productive automobiles is projected to fuel this market in the region. The International Energy Agency predicts that the country’s oil demand will rise to 2.2 million barrels per day in 2023, up from 1.8 million barrels per day in 2022. Furthermore, there has been tremendous development in both automotive sales and production in China.

Foreign investments, a thriving manufacturing sector due to favorable legislation, a burgeoning middle-class population and rising living standards across APAC contribute significantly to the consumer base. Moreover, the largest enterprises in the region planned to develop bio-based oils in response to the need for automotive sectors. For instance, on April 8, 2022, Japan’s Eneos Corp. announced plans to create biobased lubricants and greases made from patented vegetable base oils by 2023.

The newly created base oils include carbon and hydrogen and are used to develop lubricants and other products in Japan. Neste announced on October 19, 2022, that its unique NEXPAO, a high-quality synthetic base oil technology, will be deployed in a major Chinese petrochemicals joint venture’s synthetic base oil production plant in China. Neste’s Engineering Solutions, a subsidiary of CNOOC, has inked an agreement with CNOOC and Shell Petrochemicals Company Limited, a joint venture between Chinese CNOOC Petrochemicals Investment Company Limited and Shell Nanhai B.V., for this purpose. Cosmo Oil Lubricants Co., Ltd. of Japan received Biomass Mark approval for its bio-based diesel engine oil COSMO DIESEL CARBONEUT 10W-30 on June 13, 2022. The new lubricant, made up of more than 80% plant-derived base oil, is Japan’s first Biomass Mark-certified diesel engine oil.

 

BIO BASE OILS MARKET COMPETITIVE LANDSCAPE:

The global bio base oil market is huge. It is becoming increasingly competitive due to major players such as Total Energies, BP PLC, Shell, Archer Daniels Midland Co., Bunge North America Inc., Cargill, Incorporated, Battelle, Exxon Mobil Corporation, FUCHS and BioBlend Renewable Resources, LLC. The market is fragmented and market players employ market tactics such as mergers, acquisitions, product launches, contributions and collaborations to gain a competitive advantage and recognition.

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