With the increasing need to improve the IC engine-powered vehicles' fuel efficiency and the entry of new mobility, the global market for naphthenic base oil is projected to reach $ 2.9 billion by 2027.
According to Transparency Market Research (TMR), a global market intelligence company providing global business information reports and services, the naphthenic base oil market is set to grow at a CAGR of 5.5% in the next six years.
The report observed that the global naphthenic base oil market had been consistently growing in the recent past, and this trend is expected to continue till 2027.
Naphthenic base oil is suitable for several compositions such as oil expender polymers, adhesives & sealants, gear oil, plasticisers, and process oil. These finished products are then consumed in several applications, including industrial and automotive.
Some of the key players in this market include Chevron, Nynas, Royal Dutch Shell, Ergon and Calumet Specialty Products.
TMR finds that using more hybrid and electric cars to reduce CO2 emissions benefits the global naphthenic base oil market. Fuel-efficient cars require lubricants and grease with high solubility, thus demanding high such properties. The rising demand for electric and hybrid vehicles also drives the need for process oil and electrical oil, strengthening the demand for naphthenic base oil. In addition, significant R&D activities for improved product performance and the introduction of new products are driving the naphthenic base oil market, the report said.
High solvency products in end-use industries to increase the use of naphthenic base oil
The 35-60 SUS category of naphthenic base oil is anticipated to witness a substantial increase in demand during the forecast period on account of remarkable characteristics such as low temperatures and low pour points.
Furthermore, due to the growing demand for high solvency goods in many end-use sectors such as metalworking and automotive, over 1200 SUS, 200-300 SUS, and the 400-800 SUS categories of naphthenic base oil are projected to rise significantly during the forecast period.
Growing auto sector in North America to drive the market
Due to the continued expansion of the automobile sector, North America is now a large consumer of naphthenic base oil, the report said. The market is gaining traction as Group I production capability declines and the demand for high-solvency automotive formulations rises. In addition, the properties of naphthenic oil make it highly suitable for use in applications such as electrical insulating oils. This factor is likely to benefit the North American naphthenic base oil market in the near future, the report added.
Asia Pacific
The rising use of naphthenic base oil in the Asia Pacific region is being fueled by the growth of the automotive industry in countries such as India, China, and other nations of Southeast Asia. In addition, the increasing use of hybrid cars for environmental reasons is expected to trigger the regional market's growth.
Key growth drivers
The global naphthenic base oil market is highly competitive as a limited number of large-scale vendors control most market share. Most firms spend a substantial sum on extensive research and development activities, primarily to improve their products.
As oil expender polymers, adhesives and sealants, gear oil, plasticisers, and process oils, naphthenic base oils have favourable properties that make them extensively used in these applications. In addition, due to their higher solubility and ability to generate stable dispersions, naphthenic base oils are also widely used in the metalworking fluids industry.
Courtesy: Transparency Market Research. NB: Photo is representational; courtesy: Nynas.