July 14, 2024

Growing Usage Of Renewable Energy Sources To Propel The Growth Of Global Naphthenic Base Oil Market

Market Overview:

Naphthenic base oils are speciality lubricant products sourced from de-waxed Vacuum Gas Oils (VGOS) or de-waxed Light and Heavy gas oils produced in crude oil refining. They contain less than 3% aromatic hydrocarbons and offers enhanced lubrication in extreme pressure, anti-wear and temperature conditions. They are used as lubricating oil components in greases, industrial and automotive engine oils, hydraulic fluids and metalworking fluids. Their excellent chemical stability and low evaporation rate make them suitable for high temperature applications.

Market key trends:

One of the key trends in the global naphthenic base oil market is the growing adoption of renewable energy sources like wind and solar. Naphthenic base oils find major application as lubricating components in wind turbines, where their resistance to oxidation and thermal degradation aids in reliable turbine operation under harsh weather conditions. The rising installation of offshore wind farms is generating significant demand for specialty naphthenic lubricants. Additionally, governments across regions have implemented stringent emission norms to curb vehicle pollution, thereby boosting the replacement of conventional lubricants with bio-based and eco-friendly naphthenic varieties. This, coupled with the expansion of the automotive industry, is projected to drive the naphthenic base oil market during the forecast period.

Porter’s Analysis

Threat of new entrants: The global naphthenic base oil market requires high initial capital investments and R&D spending for production facilities and product development. These conditions create significant barriers to entry.

Bargaining power of buyers: The global naphthenic base oil market has large buyers such as automotive and industrial sectors. However, the availability of substitute products provides moderate bargaining power to buyers.

Bargaining power of suppliers: The global supply chain of raw materials for naphthenic base oil production is internationally dispersed. This gives low bargaining power to suppliers in the market.

Threat of new substitutes: The availability of substitute base oil products such as Group I, Group II and Group III poses moderate threat of substitution. However, superior performance properties of naphthenic base oils attract more demand.

Competitive rivalry: The global naphthenic base oil market is moderately competitive due to presence of numerous regional and global players.

Key Takeaways

The Global Naphthenic Base Oil Market Demand  is expected to witness high growth, exhibiting CAGR of 4.5% over the forecast period, due to increasing demand from industrial and automotive sectors.

Regional analysis: The Asia Pacific region dominates the global naphthenic base oil market, with China being the fastest growing market. Presence of large automotive and industrial manufacturing industries drives the growth of naphthenic base oils in Asia Pacific.

Key players operating in the global naphthenic base oil market are Nynas AB, Royal Dutch Shell, Calumet Specialty Products Partners, Ergon Inc., Chevron Corporation, Repsol S.A., ExxonMobil Corporation, H&R Group, Avista Oil, Petrobras, Lubricon Industries, Eastern Petroleum, Indo Petro Chemicals, Panama Petrochem Ltd., Gandhar Oil Refinery India Limited, Apar Industries Limited, HollyFrontier Corporation, Pentagon Lubricants, Witmans Industries Pvt. Ltd. Key players are focused on capacity expansion plans to cater to the growing demand for naphthenic base oils.

Note:

  1. Source: Coherent Market Insights, Public sources, Desk research
  2. We have leveraged AI tools to mine information and compile it