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Global base stock demand (Paraffinic, Industry, in kbd)


monograde oils in the automotive sector. While Group I light neutral (LN) may be challenged due to eventual Group II penetration, it will be subject to price points and logistics in blending plants in each region.


In Africa specifically, Group I demand is expected to remain significant through 2023 due to macro drivers and constraints. Drivers responsible for continued Group I demand in African markets include:


Figure 2: Global paraffinic base stock demand (Source: ExxonMobil assessment of publicly available information)


Additionally, concern of future Group I supply availability have led some customers to develop new formulations based on Group II base oils across several application areas, primarily automotive, but also for industrial and marine. While Group II base oils are expected to gain increasing traction in mainline applications through 2030, Group I base oils will remain relevant and valuable in the global market due to their higher solvency and wide viscosity range – particularly in emerging markets3


.


Group I Around the World Demand for Group I base oils in emerging markets, including Africa, the Middle East, China, India and Southeast Asia is expected to remain strong due to increased industrialisation and continued use of


Figure 3: Robust demand for Group I, particularly in emerging markets (Source: ExxonMobil assessment of publicly available information)


• A sustained low motorisation rate (48 cars per 1000 inhabitants according to the report published by Mordor Intelligence market research from 2018)


• Heavy equipment growth because of continued investment into larger scale mining and construction initiatives (e.g. excavators, boring machines, crushers, bulldozers, loaders etc.)


• Increased electricity demand from industrial, consumer and domestic sectors


• Exponential growing need for mobility that can only be met with large influxes of used cars with older engines, therefore sustaining use of monogrades which are predominately Group I based


Conversely, the restraints responsible for continued Group I demand include an increase in indigenous automotive production, old car import bans, oil drain interval increases in engine and gear oils, adoption of electric vehicles and new car imports from China4


.


3 Based on ExxonMobil assessment of publicly available information 4 ExxonMobil 2019 Outlook for Energy


LUBE MAGAZINE NO.157 JUNE 2020


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