Re-Refined Base Oils Market size is set to grow by USD 2.64 billion from 2024-2028, Rise in demand for high-quality oils with lower environmental impact to boost the market growth, Technavio

NEW YORK, July 5, 2024 /PRNewswire/ -- The global re-refined base oils market  size is estimated to grow by USD 2.64 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of  6.78%  during the forecast period.  Rise in demand for high-quality oils with lower environmental impact is driving market growth, with a trend towards favorable government regulations promoting use of recycled and re-refined oil products. However, costly recycling process  poses a challenge. Key market players include ADVANCED LUBRICATION SPECIALTIES, AVISTA OIL Deutschland GmbH, Biosynthetic Technologies, Clean Harbors Inc., Cleanaway Waste Management Ltd., COSAN S.A., Emerald Transformer, GFL Environmental Inc., Heritage Crystal Clean Inc., Hydrodec Group plc, Itelyum Regeneration S.p.A., Lwart Solucoes Ambientais, Neste Corp., Nynas AB, PetroChoice, PURAGLOBE Germany GmbH, ReGen III, Rock Oil Refining Inc., Shell plc, and Vertex Energy Inc..

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Key Market Trends Fueling Growth

Government regulations play a vital role in the growth of the re-refined base oils market. In the US, the Renewable Fuel Standard (RFS) mandates the blending of a specified volume of renewable fuels, including re-refined base oils, into transportation fuel each year, ensuring a consistent market for re-refined industrial oil products and encouraging investment in re-refining facilities. The European Union's Waste Framework Directive promotes a circular economy by setting targets for the recycling and reuse of waste industrial oils and encouraging the use of re-refined base oils in various applications. Australia's Product Stewardship (Oil) Act requires oil manufacturers and importers to participate in a Product Stewardship for Oil (PSO) scheme, which includes the collection and recycling of used oils, creating a sustainable solution for managing used oil. These regulations support the re-refining industry, contributing to a more sustainable and efficient use of industrial oil resources, reducing waste and greenhouse gas emissions, and decreasing reliance on virgin crude oil. Consequently, favorable government regulations are anticipated to boost the demand for re-refined base oils, driving the growth of the global re-refined base oils market. 

The Re-Refined Base Oils market is experiencing significant growth due to increasing focus on CO2 emissions reduction and managing carbon footprint. Waste oil from service stations, manufacturing establishments, heavy industry units, car repair shops, motor pools, and other sectors is being effectively utilized in re-refining. Re-refining waste oil into high-quality base oil is an eco-friendly alternative to producing virgin base oil, reducing the need for new extraction and refining processes. Governments are offering incentives and penalties to promote used oil management, leading to increased collection and recycling. Industries like automotive, marine, aviation, commercial road transport, mining, food processing, and metalworking are adopting re-refined base oils for their operations. Hydrotreating and solvent extraction technology are popular methods for re-refining. Universal Lubricants and other market leaders are investing in advanced technologies to produce high-quality base oils, meeting the demands of various sectors. Hydraulic oil, greases, engine oil, and other lubricants are being produced using re-refined base oils. The market is expanding in the automotive, industrial, and marine sectors, with regional and federal governments implementing recycling programs to support the growth. Energy consumption is also reduced as re-refining uses less energy compared to producing virgin base oil. 

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Market Challenges

• The global re-refined base oils market faces a significant challenge due to the high costs associated with the recycling process. Collecting and transporting used oil from various sources necessitates dedicated infrastructure and personnel, adding to the overall costs. The treatment and purification of the used oil to remove contaminants and impurities involve expensive equipment and chemical treatments, as well as compliance with environmental regulations and quality standards. The small market size and limited end-user base for re-refined base oils adversely affect the cost of recycling, making it less economical compared to traditional oil production methods. Additionally, the price difference between non-recycled and re-refined base oils, as well as the market price of crude oil, can discourage potential buyers and hinder market growth. Despite these challenges, re-refining used industrial oils remains an environmentally friendly solution that reduces waste and conserves natural resources.
• The Re-refined Base Oils market faces several challenges in its production process. One major challenge is the fractionation process, which separates base oils from waste lube oils. Solid contaminants, water, and impurities must be removed before re-refining techniques like acid and clay treatment, propane extraction, flash distillation, de-metallization, and hydro-processing can be applied. Environmental concerns are a significant challenge. The recycling process of re-refined base oils from crude oil and waste lube oils requires energy consumption, which can lead to high operational costs. Disposal issues also arise from the production of solid waste and the emission of pollutants. Re-refining techniques like vacuum distillation, solvent extraction, hydrotreating process, and other technologies are used to improve the quality of re-refined base stocks. However, drawbacks such as the presence of contaminants like sulfur, aromatics, and hydroprocessed oil can impact the final product's performance. Original equipment manufacturers (OEMs) prefer Group II and III base stocks for automotive oil, industrial oil, process oil, metalworking fluid, and grease due to their superior performance. Re-refined base oils, on the other hand, are often used for Group I base stocks. The market's future growth depends on overcoming these challenges and meeting the demands for sustainable and cost-effective solutions. Bio-based lubricants and fuel economy are emerging trends in the market, offering potential solutions to environmental concerns and engine oil durability. However, the market's growth is also influenced by global refining activities and the availability of refineries using advanced re-refining techniques.

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Segment Overview 

This re-refined base oils market report extensively covers market segmentation by

1. Type 
• 1.1 Group I
• 1.2 Group II
• 1.3 Group III
2. Application 
• 2.1 Engine oil
• 2.2 Industrial oil
• 2.3 Transmission oil
• 2.4 Gear oil
• 2.5 Others
3. Geography 
• 3.1 APAC
• 3.2 Europe
• 3.3 North America
• 3.4 Middle East and Africa
• 3.5 South America

1.1 Group I-  The Group I segment holds a substantial position in the global re-refined base oils market, with extensive applications in industries like automotive, transportation, and manufacturing. Group I re-refined base oils offer advantages such as high viscosity index, excellent oxidation stability, and good solvency properties. Their high viscosity index makes them suitable for applications where temperature fluctuations are common, such as engine oils. Their oxidation stability reduces the risk of equipment failure and extends machinery lifespan. Additionally, Group I re-refined base oils have good solvency properties, preventing deposit formation and maintaining clean, efficient operation. The Group I segment's growth is driven by increasing demand for sustainable solutions and emission standards compliance in automotive manufacturing and fuel efficiency improvements in transportation. These factors are expected to boost the adoption of Group I re-refined base oils in the global market during the forecast period.

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Research Analysis

The Re-Refined Base Oils market refers to the production and sale of base oils derived from the re-refining of used lubricating oils. These base oils are then used to manufacture various types of lubricants, including engine oils, transmission oils, gear oils, transformer oils, turbine oils, and others. Re-refining is an environmentally-friendly process that extends the life cycle of lubricants and reduces the dependence on crude oil. Mechanical devices such as hydrotreating and solvent extraction technology are commonly used in re-refining. Hydrotreating involves the use of hydrogen gas to remove impurities and improve the quality of the base oil, while solvent extraction separates the base oil from the used lubricant. Automotive applications, including garages and maintenance facilities, are significant consumers of base oils. The market also caters to the industrial sector, with process oils used in various industries, and metalworking fluids used in metal fabrication. Incentives and penalties from governments and regulatory bodies play a crucial role in driving the growth of the market. The marine industry and refineries are other key end-users of re-refined base oils.

Market Research Overview

Re-refined base oils are derived from the recycling process of waste lubricating oils, transforming them into high-quality base stocks for various lubricant applications. Mechanical devices such as engines, transmissions, gears, turbines, and transformers benefit from these base oils in their operations. Re-refining techniques include distillation, acid & clay treatment, propane extraction, and de-metallization & hydro-processing. The re-refining process addresses environmental concerns by reducing the need for crude oil extraction and minimizing waste disposal issues. However, it faces challenges like contaminants from solid particles, water, and fuel, which require effective cleaning and processing methods. Re-refined base oils are categorized into groups I, II, and III based on their molecular structure and performance characteristics. They are used in automotive and industrial applications, including engine oils, transmission oils, gear oils, transformer oils, turbine oils, industrial oils, process oils, metalworking fluids, greases, and more. The global refining activities involve refineries, service stations, manufacturing establishments, heavy industry units, car repair shops, motor pools, department stores, marine vessels, metalworking industries, aviation, commercial road transport, mining activities, food processing machinery, and waste oil collection. Bio-based lubricants and re-refined base stocks offer advantages like improved fuel economy, engine oil durability, reduced pollution levels, lower sulfur content, and reduced CO2 emissions, making them a sustainable alternative to virgin base oils. However, there are challenges like the drawbacks of the re-refining process, such as higher energy consumption and potential contaminants, that need to be addressed.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Type
• Group I
• Group II
• Group III
• Application
• Engine Oil
• Industrial Oil
• Transmission Oil
• Gear Oil
• Others
• Geography
• APAC
• Europe
• North America
• Middle East And Africa
• South America

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

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SOURCE Technavio