Are plus base oils filling a niche or answering a market requirement – or can they be viewed as a ‘marketing exercise’?
From my perspective plus base oils not only answer a market requirement, but also represent concrete value. This can be looked at from two perspectives. In Group II, plus base oils create new opportunities for manufacturers to move into the 5W market, where historically they might have had a smaller presence. For Group III manufacturers, plus base oils are the needed answer for filling the latest standards and upcoming requirements for low volatility, 0W-xx OEM specifications. However, it must be noted that standard Group III base oils meet the majority of the requirements for today’s 5W as well as standard volatility 0W-20 specifications. In the coming years, plus base oils will have a larger role to play in meeting new 0W-16/12 low volatility specifications.
How will the role of plus base oils shape the market?
We should approach market needs realistically. Current estimates show that 0W specifications represent around 8% of the market. At the same time, in the next couple years we can expect new specifications that will push requirements even further than today in the pursuit of – for example – improving fuel economy. Taking this into account, we foresee that these specifications will comprise around 22% of the market at the end of this decade. Further, about half of the base oil in today’s low volatility formulations is standard group III. We expect to see real demand for plus products, but we will start from a relatively low baseline with growth projected to be gradual. One also has to take into account that plus base oils will ‘find a home’ mainly in Western Europe and, to a lesser extent, in North America.
How will the growing need for plus base oils affect businesses in the coming years?
For the industry to realize and create value, suppliers need to be able to handle blender needs for conventional and plus group III oils. I believe this will create opportunities for consolidation and cooperation between market participants. And I see working together as the best way of moving forward and creating slates that will cover all of the requirements while providing the highest value for end users, customers and the industry as a whole.