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Global Re-Refined Base Oil Market - Outlook and Forecast 2022-2027
The re-refined base oil market is projected to grow at a compound annual growth rate (CAGR) of over 6% from 2022 to 2027, reaching a value of over $8 billion by 2027. This significant growth can be attributed to the increasing demand for high-quality base oils, rising awareness of environmental sustainability, and the recyclability of waste oil. The process of re-refining base oil involves removing impurities from waste oil through various technologies such as vacuum distillation, hydrotreating, clay treatment, and solvent extraction. These waste oils are sourced from garages, maintenance shops, automotive companies, and marine industries. They are then taken to a refinery where they undergo re-refining to produce Group I, Group II, and Group III base oils.
The re-refined base oil market is experiencing increased demand from the automotive and manufacturing industries. Factors driving this demand include the decreasing requirement for re-refining of Group I base stocks, the need for high-quality base stocks in lubricant production, growing vehicle engine efficiency standards, emission control mandates, and advancements in drive technology and efficiency.
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USD 6 billion in 2020
Group, Technology, End-User, and Geography
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Re-refined base oils, obtained through processes like hydrotreating and clay treatment, offer pure base stocks with reduced impurities. The re-refining of waste base stock has gained importance due to its positive impact on preserving natural resources and supporting waste oil reuse. Improper disposal of waste oil can have detrimental effects on the environment, such as harming aquatic life if disposed of in waterways. To promote sustainability, governments worldwide are implementing measures to encourage the re-refining of base oil.
Compared to conventional lubricants base stocks, the global re-refined base oil market is expected to witness exponential growth in the coming years. Factors such as rapid industrialization, environmental sustainability mandates, and automation in industries contribute to this growth.
The automotive industry is a major consumer of premium base stock, particularly in the Asia-Pacific region. Currently, the region is transitioning from Group I to Group II and III base oil as well as re-refined lubricants. This trend is expected to continue at a faster rate.
China, India, and ASEAN countries are key regions for the high-quality and sustainable base oil market. Increased urbanization, industrial activities, favorable government policies attracting foreign players to establish manufacturing units, and the rising purchasing power of consumers contribute to the growing demand for base oil in these regions.
The high antioxidant properties, low sulfur content, enhanced viscosity control, and low volatility of Group II and Group III base oil are driving the increasing demand for these base stocks. Evolving automotive regulations aimed at reducing emissions and longer drain intervals also contribute to the growth of Group II and Group III base stocks. The demand for high-quality base oil is further fueled by trends towards better fuel economy, increased engine oil durability, and reduced pollution levels. Additionally, the re-refining of used base stock for the production of Group II and III base oil is gaining traction due to its recyclability.
The increasing demand for preserving crude oil reserves and government regulations aimed at limiting CO2 emissions are key factors driving the demand for re-refining used oil. This has led to an increased capacity for re-refined base stock. Regulatory mandates for used base stock also contribute to the expansion of re-refining capacity. Developed countries such as the US, Western Europe (Germany, France), and Brazil have significant Group II re-refined base oil capacity, with more capacity being added to meet growing demand. In contrast, emerging economies like India, Russia, and Mexico have lower re-refining capacity due to abundant supplies of virgin base stocks.
The market is segmented based on various factors, including group, technology, end-user, and geography.
Segmentation by Group
Segmentation by Technology
Segmentation by End-User
Segmentation by Geography
Middle East & Africa
The re-refined base oil market is divided into three segments based on their group classification: Group I, Group II, and Group III. Among these, the Group II segment is estimated to be the largest and most dominant during the forecast period, experiencing higher growth compared to others. This preference for Group II stocks can be attributed to their low sulfur content, low volatility, and lower viscosities, making them highly favored by automotive and industrial lubricant manufacturers over Group I. Factors such as the increasing demand for automobiles, growth in aviation and commercial road transport, among others, are expected to contribute to the rising demand for Group II re-refined base oil products.
In terms of applications, the hydrotreating segment is anticipated to hold the largest portion of the global re-refined base oil market share. This segment is projected to witness similar growth throughout the forecast period due to its ability to deliver high-quality products compared to other processes. Hydrotreating enhances base stock quality, color stability, and reduces the levels of sulfur, nitrogen, halogen, oxygen, and metal compounds. It is mainly utilized in the production of Group II base oil.
The automotive oil segment holds the significant market share and is expected to be the fastest-growing segment. Re-refined base oils find extensive usage in automotive, industrial, process oil, grease, metalworking fluid, and hydraulic oil applications. Within this, automotive oil is poised to dominate the market during the forecast period. Automotive engine oil is designed for various types of vehicles including commercial vehicles, passenger cars, two and three-wheelers, and more. Its primary functions include protecting metal surfaces from corrosion, reducing friction on moving parts, and cleaning the engine from sludge. The growing demand for automotive vehicles in the Asia-Pacific, South America, and Middle East regions is expected to drive the growth of this segment.
The Asia-Pacific region is projected to emerge as the fastest-growing market for re-refined base oil during the forecast period. With China leading the way, this region displays significant demand from sectors such as automotive and transportation, mining, manufacturing, and machinery. The U.S. market for re-refined base oil has already established a strong presence due to well-established infrastructure for used oil collection and ongoing governmental efforts to reduce carbon footprint. Supportive government subsidies and incentives further promote the growth of the re-refined base oil market in the U.S. Moreover, countries like India and Australia are expected to increase their re-refining capacity to reduce reliance on imported base oil. Increasing environmental awareness and government measures aimed at promoting sustainability and self-reliance also act as drivers for the regional re-refined base oil market.
The competitive landscape in the global re-refined base oil market is currently becoming increasingly intense. Vendors may face challenges due to the rapidly evolving technological environment and sustainability requirements, as customers demand continuous innovations and upgrades. The market is characterized by consolidation, with only a few players offering products with advanced functionality.
Key companies profiled in this report include Avista Oil Deutschland Gmbh, Heritage-Crystal Clean, Safety-Kleen System, Southern Oil, Veolia, AL Haya, Benzoil, Cator, Lwart Environmental Solutions, Masafee, Nas Oil & Fuel, One Ten Impex, Puraglobe, R.A.M. Oil, RenGen III, South West Petroleum (Asia Pacific) Ltd., STR Tecoil, SENER Group, Tayras, Vertex Energy Inc.
Key Questions Answered
What is the estimated market size of the re-refined base oil industry?
The re-refined base oil market is projected to reach a value of USD 8.8 billion by 2027, exhibiting a compound annual growth rate (CAGR) of 6.5% during the period from 2022 to 2027.
What are the primary trends observed in the re-refined base oil market?
Key trends in the re-refined base oil market include an increasing demand for high-quality base oil, a focus on energy conservation and the preservation of natural resources, as well as a significant expansion of re-refining capacity.
Which companies are the key players in the re-refined base oil market?
The major companies operating in the re-refined base oil market include Safety-Kleen Systems (US), Heritage-Crystal Clean (US), Avista Oil (Germany), Southern Oil (Australia), Benzoil (Australia), Puraglobe (US), Vertex Energy (US), and Tecoil (Finland).
Which regions are expected to experience the fastest growth rate in this market?
The Asia-Pacific region is anticipated to exhibit the fastest growth rate in the re-refined base oil market.
Which segment has the largest market share in the re-refined base oil market?
The Group II segment is expected to hold the largest share in the re-refined base oil market.