How are OEM trends and new specifications driving base oil selection?
Change in the base oils industry has been coming and will likely accelerate. It will influence base oil selection over the next few years, requiring businesses to answer some important questions. Here, I address this change and note some key related questions.
In mid-September 2020, I was invited to speak at the 10th South-American Meet the Market virtual Conference, where I presented my view on the future of base oil selection. Over the coming years, the market will face a transformation that will force many businesses to carefully review and evaluate their base oil slate needs and suppliers.
Expect to learn:
Factors that will influence base oil selection in the near future
How base oil market share – by viscosity grade – may look in 2030
A guide for blenders and formulators: questions to consider when choosing the right base oil slate solution for your business
It’s all about the tests
New and upcoming legislation pushes OEMs to focus even more on compliance with fuel economy regulations. This means that new ways of achieving these challenging limits and avoiding expensive fines are being sought and implemented. Homologation tests that measure vehicle fuel economy are the area of focus for OEMs. Seeking to squeeze out every gain they can, OEMs are increasingly looking at the ability of base oils to provide reduced early test friction by driving down low temperature viscosity requirements.
Consequently, we have witnessed a move to 5W and, now, on to 0W engine oils in order to improve measured fuel economy. The consumer may never see this benefit, but the potential test result improvements are driving change. This trend has clear implications for future base oil slate selection.
A new force on the market
As OEMs implement engine design changes to accommodate lower viscosity oils and new vehicles enter the market – retiring older models – the move beyond 5W towards 0W oils will speed up. A recent analysis from my friend, Steve Haffner of SGH Consulting, predicts that by 2030, 5W will be the biggest player in all markets, with 0W growing in all regions. In North America 0W already claims nearly 20% of the market.
In Europe and North America 0W oils will grow rapidly and in the Asia Pacific region, 0W could even eclipse 5W by 2030. This last prediction is based upon the rapidly expanding car park with newer engines as millions of people purchase their first automobile.
2030: Projected viscosity grade share by region (analysis by Steve Haffner, SGH Consulting)
What solutions can base oil manufacturers provide to address future needs?
There are currently many ways to address 0W specifications entering the market, although each has its pros and cons. Two major Group II suppliers have already upgraded their plants to offer oils informally referred to as Group II+ to keep Group II relevant and claim some 5W and 0W share from Group III.
Of course, standard Group III is the established solution for the majority of 0W and 5W formulations, but for more challenging OEM specifications with low volatility limits something more is needed. Group III+ can work in many formulations but it often takes a lot of Group III+ – at added cost. PAO, esters and exciting new Group III+ biobased base stocks, while expensive, are very potent solutions and require low volumes to bring big performance improvements.
Questions to guide you to the best base stock slate solution
With this wide variety of options to choose from, blenders and formulators considering possible choices face several important questions:
- Does the preferred base stock slate have the necessary approvals?
- Can the slate meet the blending requirements for all needed viscosity grades?
- Does the base stock manufacturer have a reliable supply record?
- Does the supplier communicate well with customers, additive companies and stay abreast new developments?
- Is the preferred option cost effective or, more specifically, does it have a competitive base oil net treat cost?
(This last term, taken from the additive marketplace, looks at the total costs of a complete base oil solution by taking into account the net cost of the volume weighted base oil components.)
Answers for a demanding reality
Where does this leave us? From my perspective, the best choice for blenders and additive companies will be the one that creates the most value while providing solutions for a 5W/0W world.
This essentially means finding a base stock slate with a full range of approvals, competitive net treat cost, a complete suite of blending capabilities and excellent support, supply and logistics. As a reliable partner always ready to answer market requirements and fully committed to quality, Neste Base Oils will address all of these needs with our NEXBASE™ slate. Expect to hear more from us on this subject soon.
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