Performance Oil Market

Performance Oil Market Overview

Performance Oil market size is forecast to grow at a CAGR of 4.2% during 2022-2027. Performance oil is specially formulated to meet the needs of a specific application. Globally, increasing automotive and aerospace industry, rise in consumer awareness regarding performance oil, and growing industrialization in developing countries are the prime growth drivers of the performance oil market. In addition, an increase in the adoption of performance oil for newer applications and emerging economies such as China, India, and others will create new opportunities for performance oil. However, stringent government regulations, higher costs of research and development, and weak economic conditions in European countries are the key restraints for the performance oil market. Process oil, Hydraulic fluid, Metal Working fluid are the major types that are used as Performance Oil. Process oils are special oils that are used in a wide variety of chemical and technical industries either as raw material components or as an aid to processing. Hydraulic fluid is a non-compressible fluid that is used to transfer power within hydraulic machinery and equipment. It is synthetic or mineral-based. Metalworking fluids are products that facilitate metal tooling and prolong the service life of tools. They are used for machining, metal forming, and thermal treatment. Water in oil emulsions and oil in water emulsions are used. Furthermore, the flourishing automotive and aerospace industry is also expected to drive the Performance Oil market substantially during the forecast period.

COVID-19 Impact

Currently, due to the COVID-19 pandemic, the core industries such as aerospace, automotive, and energy industry were highly impacted. Most of the manufacturing plants of aircraft and automobiles were shut down, which declined the production of commercial aircraft and vehicles. For instance, according to the Welsh Government services and information, globally (overall manufacturers) demand for production of short-haul sized aircraft is likely to drop by 15% (around 1,500 fewer aircraft out of 10,000) and by 30 - 65% for long haul sized craft, by the end of 2025, (around 600 - 1,300 fewer aircraft out of 2,000). Also, due to supply chain disruptions such as raw material delays or non-arrival, disrupted financial flows, and rising absenteeism among production line staff, OEMs have been forced to function at zero or partial capacity, resulting in lower demand and consumption of Performance Oil in 2020.

Report Coverage

The report: “Performance Oil Market - Forecast (2022-2027)” covers an in-depth analysis of the following segments of the Performance Oil Industry.

By Type: Process Oil, Hydraulic and Transmission Fluid, Metal Working Fluid, Heat Transfer Fluid, and Others.

By End-Use Industry: Industrial, Construction, Automotive, and Others.

By Geography: North America (USA, Canada, and Mexico), Europe (UK, Germany, France, Italy, Netherlands, Spain, Russia, Belgium, and Rest of Europe), Asia-Pacific (China, Japan, India, South Korea, Australia, and New Zealand, Indonesia, Taiwan, Malaysia, and Rest of APAC), South America (Brazil, Argentina, Colombia, Chile, and Rest of South America), Rest of the World (the Middle East, and Africa)

Key Takeaways

• Asia-Pacific dominates the Performance Oil market. China, India, Japan, and South Korea are the major countries in this regional Performance Oil market. Various leading players have been carrying out strategic expansion activities in the region to meet the growing demand from various end-users.
• Performance Oil market in the Asia Pacific is projected to have the fastest growth, owing to rapidly increasing industrialization, boosting urbanizations, rise in consumer awareness for performance oil, and growing automotive production in developing nations such as China and India in this region.
• Asia-Pacific is also the leading market for process oil followed by North America. Asia-Pacific region is forecast to have the highest growth in the next few years due to the growing adoption of process oil. The significant driver in the global performance oil market is the growth of the process oil market in the automotive sector.
• The performance oil industry has changed considerably in the recent past. Putting into practice new and advanced technologies to increase the throughput of performance oil as well as the strategy of growing partnerships are some of the key trends identified across the value chain of the global performance oil market.
• Increasing infrastructural developments are primarily responsible for the high demand for Performance oil fluids. New construction activities, along with the rehabilitation of older structures are leading to increasing use of heavy construction machinery, thereby increasing the demand for Performance oil fluids used in this machinery and others.

Process Oil segment held the largest share of 32% in the performance oil market in 2020. Process oils are the raw stock fluids, typically derived from crude oil or synthetic material, mixed with additives to create lubricants, greases, thermal oils, hydraulic fluid, and metalworking fluids. Process oils are mostly range of paraffinic through primarily naphthenic to aromatic in nature and are accessible in numerous molecular weights which approximately resemble their viscosities. They are used in an extensive range of industry segments such as plasticizers and extenders, fetching an important part of formulated ready-made articles and normally used as a support in a production procedure. These process oils are being consumed in various applications ranging from adhesives, sealants and coatings, automobile, agriculture, oil & gas, construction, textiles, household products, and others. Major types of process oil used in these applications are aromatic, naphthenic, and paraffinic.

The industrial segment held the largest share in the Performance oil market in 2020 and is growing at a CAGR of 3.8% during 2022-2027. They are used in an extensive range of industrialized segments such as plasticizers and extenders, fetching an important part of formulated ready-made articles and normally used as a support in a production procedure. These performance Oils are being consumed in various applications ranging from adhesives, sealants and coatings, automobile, agriculture, oil & gas, construction, textiles, household products, and others. Owing to benefits such as greater productivity, faster mixing times, lower power consumption per batch, performance oils are widely used in industrial and automotive. The demand for Performance Oils like hydraulic fluid is high in the construction industry due to the rising construction activities, especially in the residential sector in China and the rising infrastructural developments in India.

Asia-Pacific region held the largest share of 45% in the Performance Oil market in 2020 owing to the accelerating Industrial, Construction, and Automotive sectors in the region. Asia-Pacific is the leading market for performance oil followed by North America. Asia-Pacific dominates the performance oil market due to the easy availability of raw materials in this region. China is the largest automobile manufacturer in the Asia-Pacific region and is among the leaders in the global automotive market. Asia-Pacific has become an area of immense potential and opportunities, due to the extensive demand for Industrial, Automotive, and Construction in countries, such as India and China. China is the world's largest vehicle market, according to the International Trade Administration (ITA), and the Chinese government expects automobile manufacturing to reach 35 million by 2025. According to OICA, 2020 marked the worst crisis ever to impact the automotive industry. Meanwhile, Asia resisted reasonably well, with a decline of only 10%. In particular, China, which was hit hard in 2020’s first months, recovered very quickly; all in all, the Chinese reduction in production has been limited to only 2%. Asia remains by far the world’s largest producing region, with a 57% share of global production. Due to all such factors, the market for Performance Oils in the region is expected to have a steady growth during the forecast period.

Performance Oil Market Drivers

Increasing Automotive Production

The specific strength and modulus of Performance Oils are higher than most ordinary fluids thus they are increasingly being employed to replace their Oil equivalents in the fabrication of the interior and exterior of the automobile. Performance Oil is becoming more popular in the automobile sector due to its greater productivity, faster mixing times, lower power consumption per batch. Performance Oil is utilized in a variety of applications in the automobile industry, including automobile hoses, diaphragms, railroad car connection membranes, anti-lock brake systems, and wheel wells. In spite of the coronavirus crisis, between march and may 2020, global automotive sales contracted by around 15% globally. But within few months, the market recovered by 5% showing a positive sign of growth. Thus, increasing automation production will require more automotive components, which will act as a driver for the Performance oil market during the forecast period.

Increasing Construction Plans

Many Increasing infrastructural developments are primarily responsible for the high demand for Performance oil fluids. New construction activities, along with the rehabilitation of older structures are leading to increasing use of heavy construction machinery, thereby increasing the demand for Performance oil fluids used in this machinery and others. On a global scale, despite the ongoing uncertainty over the COVID-19 pandemic, growth in global construction output has reached 5.7% in 2021, following the 2.4% drop in 2020. For example, In 2021, Under National Infrastructure Pipeline (NIP), India has an investment budget of $1.4 Trillion on infrastructure - 24% on renewable energy, 19% on roads & highways, 16% on urban infrastructure, and 13% on railways. Under the Smart Cities Mission till June 2021, 2,734 projects have been completed of the total 5,956 projects.

Performance Oil Market Challenges

Toxicity in Process Oil will affect the Performance Oil Market

The limitations related to the polycyclic aromatic hydrocarbons convention and the instability of feedstock are the major factors hampering the global process oils market. The limitation on the use of polycyclic aromatic hydrocarbons is negatively affecting the growth of the process oils market. Toxicity is a major concern with the use of process oil because it contains polycyclic hydrocarbons, which are toxic. The other limitations affecting the growth of the process oils because it contains polycyclic hydrocarbons, which are toxic. The other limitation affecting the growth of the process oils market is the volatility of raw material prices. It represents a significant risk for the performance of the company and its long-term growth, especially in the petrochemical industry. Such factors have become the major challenge of Performance Oils in terms of consumption, which constrains the growth of the market.

Performance Oil Market Landscape

Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the Performance Oil market. Performance Oil market top companies are:

Royal Dutch Shell

DOW Chemical

Idemitsu Kosan

Petroliam Nasional Berhad

Huntsman

Fuchs Petrolub

Exxon Mobil

BP

Chevron

BASF

Acquisitions/Technology Launches

• In October 2020, Castrol India Launched the All-New Castrol Power1 Ultimate promising an outstanding performance for a thrilling ride. This premium range of lubricants is developed with full synthetic technology and is available in a range of choices 10W-40, 10W-50, 15W-50, and 20W-50 for scooters.
• In October 2020, BPCL launched 2 high-end synthetic lubricant variants to increase its market share.
• In May 2020 Chevron lubricants launches a new product for combined heat and power. To help combat this growing demand, Chevron Lubricants has launched Texaco HAD 9300 SAE 40, a premium performance, medium ash gas engine oil, specially developed for 4-Cycle, High BMEP Steel Piston engines, running on pipeline-quality natural gas.

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