White oil demand mostly flat

The global demand for white oils is estimated at 1.6 million tonnes in 2015 and has been increasing only moderately over the past four years, according to a new report from New Jersey, U.S.A.-based consulting firm Kline & Co.

Demand for white oils is expected to grow at a compounded annual growth rate (CAGR) of 1.3% from 2015 to 2020 in the markets included in the report.

Asia-Pacific is the largest white oils-consuming region, followed by North America and Europe. South America has witnessed a decline in white oil demand since 2011 due to contraction in Brazil, a result of the country’s on-going economic crisis.

India will witness the highest demand growth at a CAGR of 1.8%, driven by the Indian government’s Pharma Vision 2020, which aims at making India the global leader in end-to-end drug manufacturing.

Currently, close to 70% of white oil demand in these key markets is for Group II-based products. Traditionally, white oils have been made from paraffinic Group I and naphthenic basestocks. However, the usage of Group I has been shrinking due to the decline in Group I supply, whereas Group II, III and GTL supply have been growing.

Group II usage is high, particularly in North America and India. White oil suppliers in these regions are said to prefer Group II over Group I because of its higher purity and abundant availability.

While competition in this product segment is increasing among base oil suppliers, they do have an advantage over new suppliers because of the product approval process, which could be lengthy, thus preventing blenders to switch easily.

Cosmetics and toiletries and plastics and polymers are the major consumers of white oils. The cosmetics and toiletries industry alone accounts for more than one-fourth of total white oil demand. Textiles is the third largest consumer of white oils, with demand coming mainly from China, where it accounts for almost one-third of white oil demand.

Pharmaceutical/food-grade white oils account for nearly two-thirds of total white oils consumed in key markets in 2015. However, in China, technical grades take the vast majority of the market, as most of the white oil-consuming sectors do not have higher requirements in quality, such as textiles, inks, polystyrenes and adhesives.

“Due to the heavy dependence on imports, Latin America and Africa are among the most lucrative markets offering good opportunities to expand sales of white oils,” said Kline’s Sushmita Dutta, project lead, energy.

“As the regions’ economies grow, demand for pharmaceuticals, cosmetics and toiletries will also increase.”