“Transition from Group I to Group II Base Oils”
- Stricter environmental regulations and the need for higher-performance lubricants have propelled the demand for Group II base oils, which offer better oxidation stability and lower sulfur content compared to Group I. This transition aligns with global efforts to reduce emissions and improve fuel efficiency.
- The market has seen a decline in Group I base oil production due to plant closures and upgrades. For instance, Eneos in Japan permanently shut down its Wakayama Group I plant in mid-October 2023, and its Mizushima A Group I plant underwent maintenance from September to November 2023. These developments have tightened Group I supply, prompting a shift towards Group II base oils, which are more readily available and meet current market requirements
- The narrowing price gap between Group I and Group II base oils has made the latter more economically viable.
- For instance, In Southeast Asia, consumers have increasingly favored Group II grades as the price differential has decreased, making them a cost-effective alternative without compromising on quality
- The Asia-Pacific base oil market is undergoing a structural transformation, with a clear move towards Group II base oils driven by regulatory, supply, and economic factors. This trend is expected to continue, reshaping the market landscape and influencing production and consumption patterns across the region.
