by Naphthenic base oils are primarily used in industrial and automotive lubricants due to their superior oxidative stability and low-temperature fluidity properties. They provide excellent performance under high temperatures and pressures. Naphthenic base oils are made from petroleum-derived, naphtha-rich crudes through conventional refinery processes such as distillation and extraction. The key advantages of these oils include low pour point, good solubility, low volatility and flammability. They are commonly used as process oils in printing inks, pesticides, sealants and adhesives due to their low viscosity.
The global Naphthenic Base Oil Market is estimated to be valued at US$ 1.26 Bn in 2023 and is expected to exhibit a CAGR of 4.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
One of the key trends in the naphthenic base oil market is the rising demand from the automotive industry. Naphthenic base oils are extensively used as lubricants in automotive engines and transmissions owing to their superior oxidation resistance and thermal stability. With the rapid growth of the automotive sector worldwide, especially in Asia Pacific and Middle East & Africa regions, the demand for naphthenic base oils from this industry is expected to increase significantly over the forecast period.Another major trend is the increasing focus on production of Group I base oils. Group I base oils have higher purity levels and provide better performance compared to Group II and Group III base oils. Many naphthenic base oil manufacturers are investing in refinery upgrading projects to shift their product portfolio towards premium Group I base oils. This is expected to open lucrative growth opportunities for naphthenic base oil market players in the coming years.
Porter’s Analysis
Threat of new entrants: The threat is moderate as the naphthenic base oil market requires high capital investment and existing players have well established supply chains and brand recognition.
Bargaining power of buyers: The bargaining power of buyers is high due to the presence of many manufacturers supplying naphthenic base oils. Buyers can easily switch between suppliers based on price and quality.
Bargaining power of suppliers: The bargaining power of suppliers is low as naphthenic base oils are produced from crude oil feedstock whose prices are governed by global commodity exchanges and suppliers have limited control over prices.
Threat of new substitutes: The threat of substitutes is moderate as other base oil alternatives like paraffinic and gas-to-liquid based oils can be used for some applications but have limitations.
Competitive rivalry: The competitive rivalry is high due to presence of many international players offering price competition.
Key Takeaways
The global Naphthenic Base Oil market is expected to witness high growth over the forecast period owing to rising demand from industrial and automotive sectors. The Asia Pacific region currently dominates the market and is expected to maintain its lead during the forecast period due to increasing consumption from China and India.
Regional analysis: The Asia Pacific region currently accounts for the largest share of the global naphthenic base oil market led by China and India. Growing automotive production along with industrial expansion is driving demand.
Key players: Key players operating in the 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. Nynas AB is one of the leading players providing high quality naphthenic base oils across the globe.
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