Compressor Oil Market Size, Share & COVID-19 Impact Analysis, By Base Oil (Mineral, Synthetic, Semi-synthetic), By End-use Industry (Manufacturing, Oil & Gas, Power Generation, Automotive, and Others), and Regional Forecast, 2021-2028

The global compressor oil market size was USD 8.3 billion in 2020 and is projected to grow from USD 8.7 billion in 2021 to USD 12.2 billion in 2028 at a CAGR of 5.0% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with product witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the overall market exhibited a huge decline of 14.9% in 2020 compared to the average year-on-year growth during 2017-2019. The sudden decline in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

Compressed air has become a significant energy transfer medium in various technical applications. Several end-use industries rely on the dependable production of compressed air, and as a result, air compressors and other gas compressors are critical equipment in many industrial domains. The appropriate lubricant is essential for reliable and efficient plants and machinery; as short-lived breakdowns can result in production losses. Compressed air generation has improved in recent years, and will drive the compressor oil market growth during the forecast period.

COVID-19 IMPACT

Reduced Industrial Activity and Supply Chain Disruption during COVID-19 Pandemic to Halt Market Growth

The COVID-19 pandemic has had a negative impact on every region, every business, and every aspect of life, and this market is no exception. The emergence of COVID-19 and the subsequent economic slowdown affected most of the major end-use industries, negatively affecting volume demand. The negative effects of COVID-19 have had a detrimental influence on volume demand, owing to delays or even shutdowns in routine operations across a wide range of industries. The restrictions enforced to prevent the virus from spreading affected the country’s production facilities, resulting in a reduced capacity or even total shutdown.

Furthermore, due to COVID-19, the volume of investment inflows decreased or ceased for the majority of 2020. Due to the lockout, laboratories and technology centers were closed, forcing new research projects for clients to be placed on hold.  Lubricant manufacturers and stakeholders in the lubricant supply chain have had a significant impact due to the pandemic since transportation and manufacturing activities decreased across the world. The COVID-19 pandemic has led to many challenges in industrial production globally. Compressor oil and other lubricant consumption declined because of plant shutdowns.

LATEST TRENDS

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Biodegradable Lubricants are an Eco-friendly Alternative to Mineral Oil-Based Lubricant

The rising use of bio-based lubricants as a viable alternative to petroleum-based lubricants is likely to address growing environmental concerns. Plant extracts and animal fats are being used as renewable raw resources in growing amounts. Following adequate chemical treatment, naturally produced plant oils and animal fats are used in lubricants due to environmental and economic considerations. Additionally, vegetable oil-based lubricants provide a number of advantages over petroleum-based lubricants, including biodegradability, lower environmental impact and cost-effectiveness.

Due to their lubricating capabilities, bio-based base lubricants are used in various end-use sectors, including power generation, automotive and transportation, heavy equipment, metallurgy and metalworking, chemical manufacture, and so on. Rising awareness about environmentally friendly materials, along with stricter environmental restrictions, is likely to fuel demand for bio based compressor oils during the forecast period.

DRIVING FACTORS

Growing Demand from Petrochemical Sector is anticipated to Drive Market Growth

The development of more fuel-efficient automobiles and the rising popularity of electric vehicles that do not need gasoline or diesel are anticipated to reduce petroleum consumption share for the production of transportation fuel. In contrast, the petrochemical industry has grown rapidly over the previous decade and has significant potential for expansion during the forecast period. Major lubricant and engineering companies have recognized this trend, installing new equipment and even designing new processes to capitalize on this prospect. These new installations include compressors, extensively used in petrochemical complexes to compress utility air and product gases.

Lubricating oil plays an important part in overall profitability as it reduces friction, minimizes wear, dissipates heat, and functions as a sealing barrier against gas pressure drops, substantially lowering maintenance costs. Additionally, choosing an appropriate lubricant helps ensure smooth operation in the plant, reducing downtime and longer service life for the compressors. Many petroleum companies are ramping up their petrochemical production and setting up new facilities to anticipate a transition in petroleum consumption from fuel to petrochemical production.

To capitalize on the cheap raw resources available, petroleum-producing countries focus on value addition by producing petrochemicals. For example, Saudi Aramco and SABIC have announced the selection of Yanbu, on Saudi Arabia's west coast, as the site for constructing an integrated industrial complex to convert crude petroleum to chemicals. The new complex will produce about 9 million metric tons of petrochemicals per year, converting Arabian light crude petroleum into lubricants, solvents, and other products.

As new petrochemical facilities start their operation, demand for equipment such as compressors and related products is likely to rise. Lubrication is a critical element for maintaining normal operations in a petrochemical complex, a rise in the number of petrochemical complexes is anticipated to benefit and drive the market.

RESTRAINING FACTORS

Stricter Regulations Owing to Rising Environmental Concerns are Likely to Hinder Market Growth

The lubricants sector, in general, has been under scrutiny by various regulatory agencies in terms of the environment, safe handling, storage, and disposal of products. Rising environmental concerns have prompted regulatory agencies to adopt stricter regulations for industrial lubricants, including compressor oil. For example, the U.S. Environmental Protection Agency's amendment for Lubricants Group Standards in 2017 mandated lubricant labeling, advertising, packaging, disposal, supply, storage, and usage improvements.

Such regulatory reforms directly influence how lubricant blenders and marketers conduct their business. Additionally, upgrading existing standards to incorporate a new class of chemicals significantly influences lubricant costs at both the manufacturer and supplier levels of the value chain. All of these factors influence the entire economics of the business, so tighter regulation is likely to hinder the industry growth.

SEGMENTATION

By Base Oil Analysis

Mineral Segment to Hold a Substantial Share of Global Market Due to Lower Price

Based on base oil, the market is segmented into mineral, synthetic and semi-synthetic.

The mineral oil segment held the majority of the compressor oil market share in 2020 and is likely to keep this position since it is less expensive than synthetic alternatives. Even though the popularity of synthetic base oil is increasing among consumers, mineral oil based lubricants still dominate the market. Mineral oil-based lubricating products are less expensive than synthetic compressor oil since it is produced with a mineral base derived from crude petroleum. This sort of base oil is normally advised for use in compressors utilized continuously and for domestic machinery with light-duty applications. For example, mineral oil-based refrigeration compressor oil is often used in CFC, HCFC, and mixed refrigeration systems. These mineral oil-based refrigeration lubricants offer excellent chemical and thermal stability and a very long service life with optimized solubility.

By End-use Industry Analysis

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Manufacturing Segment to Expand Rapidly Due to Rapid Growth in Asia Pacific Region

In terms of end-use industry, the market is segmented into manufacturing, oil & gas, power generation, automotive, and others.

In terms of value, the manufacturing segment constituted the dominant market share in 2020. There is a great deal of interest in increasing durability, performance, and energy efficiency in the automobile and machinery sectors by using appropriate lubricant materials. Due to its high lubricating properties, this oil enhances machine service life by minimizing wear and tear, thus reducing downtime and increasing profitability in manufacturing plants. Manufacturing has long played an important part in developing countries' economic growth. Rising manufacturing sectors, particularly in the Asia Pacific region, are anticipated to evolve into global manufacturing hubs during the forecast period, triggering further market expansion.

REGIONAL INSIGHTS

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The market size in Asia Pacific stood at USD 4.58 billion in 2019.  Asia-Pacific dominated the market share in 2020 and is likely to maintain its high growth rate during the forecast period. Asia-Pacific is rapidly gaining the role of a global industrial hub. Following established countries like the U.S. and Germany, Asian countries like China and India manufacture and export a significant number of passenger automobiles and other vehicles. Due to supportive government regulations and cheap labour, the transfer of manufacturing operations to Asian countries is expected to create automobile manufacturing hubs and promote industrialization even more. Furthermore, a shift in the trend toward a more sustainable and productive manufacturing sector is anticipated to fuel the market growth in the region.

The North American regional market is likely to be driven by revitalized industrial activities in the U.S. and Canada. Compressors are used in power plants for various purposes, including cooling turbines and reactor cores, fuel gas boosting, desulphurization, and nitrous oxide treatment. Building and automobile electrification will have a positive influence on the power industry in North America, which is likely to drive the market.

Rising industrial activities and modernization of industrial machinery are likely to drive growth in the European market. The presence of countries such as Germany, France and Spain with their well-established industrial sector is expected to drive market growth.

Market growth in Latin America is expected to remain modest due to the region's political and economic backwardness. However, countries such as Mexico have seen significant investments in the automobile industry in recent years as a result of lower production costs and a logistical advantage as exporters to the U.S. and Canada. Mexico's free trade agreements improve the country's capacity to become a prominent global export base.

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The Middle East and Africa have witnessed a rapid growth in the base oil sector along with increasing industrialization, urbanization, and population growth over the past decade. Consistent economic expansion, along with an improving standard of living, has resulted in a significant demand for high-performance, premium passenger automobiles. Such trends have attracted significant investment from foreign automakers, which is expected to accelerate market expansion in the region.

KEY INDUSTRY PLAYERS

Strategic Planning Adopted by Companies to Strengthen Their Market Share

Large lubricant manufacturing companies compete with small and medium sized specialized players in the compressor oil industry, which is a fiercely competitive market. The major market share is currently owned by key players such as Royal Dutch Shell plc, Chevron Corporation, Exxon Mobil Corporation, Repsol, FUCHS. The market has a high concentration of power.

Global petroleum refiners, which have traditionally produced lubricants, are now meeting the demand for compressor oils in a variety of end-use sectors. Other market participants include Indian Oil Corporation Ltd, Total SA, CASTROL LIMITED, HP Lubricants, Klüber Lubrication, Atlas Copco AB, Morris Lubricants, and Penrite Oil.

LIST OF KEY COMPANIES PROFILED:

• Royal Dutch Shell plc (The Hague, The Netherlands)


• Chevron Corporation (California, U.S.)


• Exxon Mobil Corporation (Texas, U.S.)


• Repsol (Madrid, Spain)


• FUCHS (Mannheim, Germany)


• Indian Oil Corporation Ltd (Mumbai, India)


• Total SA (Paris, France)


• CASTROL LIMITED (Pangbourne, U.K.)


• HP Lubricants (Mumbai, India)


• Klüber Lubrication (Weinheim, Germany)


• Atlas Copco AB (Stockholm, Sweden)


• Morris Lubricants (Shrewsbury, U.K.)


• Penrite Oil (Melbourne, Australia)


• Other Key Players

KEY INDUSTRY DEVELOPMENTS:

• October 2019 FUCHS acquired Nye Lubricants Inc., a producer of high specialized synthetic lubricants. As a result of this acquisition, the FUCHS Group's specialty lubricants product range has been expanded even further. The firm has increased its portfolio of engineered solutions across several industries, while also providing potential to serve new high-end and critical applications.


• June 2019 – Total launched Planetelf PAG K 40, a high-performance lubricant for automotive air conditioning compressors. Planetelf PAG K 40 is designed to fulfill the requirement of both R134a and HFO-1234yf refrigerant gases used in the automobile air conditioning industry. Planetelf PAG K 40 offers high miscibility, superior protection, and lowers compressor wear regardless of the gas used.

REPORT COVERAGE

An Infographic Representation of Compressor Oil Market

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The research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, products, and products. Also, it offers insights into key market trends and highlights vital industry developments. In addition to the factors mentioned above, the report encompasses various factors contributing to the market's growth in recent years. It further includes historical data & forecasts revenue growth at global, regional, and country levels and analyzes the industry's latest market dynamics and opportunities.

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