Process Oil Market Expected to Reach $6.6 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Process Oil Market," The process oil market was valued at $4.7 billion in 2021, and is estimated to reach $6.6 billion by 2031, growing at a CAGR of 3.4% from 2022 to 2031.

Process oils are special oils that are made from complex mixtures of aromatic, naphthenic, and paraffinic hydrocarbons. They are used either as a raw material or intermediate in various end-use sectors, including tire manufacturing, rubber manufacturing, polymer manufacturing, textiles, and others.

Factors such as rise in demand for consumer goods, accelerating sales of passenger vehicles, and increase in original equipment manufacturers (OEMs) have surged the demand for tires where process oil is used as a solvent during tires manufacturing. This may act as one of the key drivers responsible for the growth of the process oil market. Furthermore, increasing elder population in countries such as Italy, Japan, and others have surged the demand for process oil-based anti-ageing creams. This factor is anticipated to increase the sales of process oil for personal care; thus, boosting the market growth.

However, there are certain factors that are predicted to hamper the growth of the process oil market in the coming future. For instance, the high costs associated with the formulation of process oil in personal care products, and unavailability of quality process oil, are few of the restrains that may hamper the growth of the process oil market during the forecast period.

On the contrary, the increasing demand for crops has led the farmers to increase their crop yield where process oil is widely used as crop protection oil for controlling a wide range of insect pests in the fields. Furthermore, factors such as increasing demand for consumer goods has surged the establishments of manufacturing units in both developed and developing economies where process oil is used as a carrier fluid in various chemical processes. This may create lucrative opportunities for the process oil market during the forecast period.

The process oil market is segmented on the basis of type, application, and region. By type, the market is segregated into naphthenic, paraffinic, non-carcinogenic, and aromatic. The naphthenic segment dominated the global market in terms of revenue in 2021, with 38.2% of the total share. This is attributed to the fact that naphthenic process oils are hydrogenated and highly refined oils with light color and low sulfur content. Factors such as rise in sales of automotive vehicles and growing demand for metals in various end-use sectors, including construction, aerospace, power, and other have surged the demand for naphthenic process oils used as metalworking fluids in metal processing industries. This has surged the popularity of naphthenic type process oil among various end-use sectors.

By application, the market is divided into tire & rubber, polymer, personal care, textile, and others. The tire & rubber segment dominated the global market in terms of revenue in 2021, with 35.5% of the total share. This is attributed to the fact that both developed and developing economies are constantly engaged in manufacturing advanced aircrafts with modern armor facilities. This has surged the demand for high quality tires that is capable of handling high pressures. This factor may augment the growth of the process oil market for tire & rubber applications.

Region wise, the process oil market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. The Asia-Pacific process oil market size is projected to grow at the highest CAGR during the forecast period, and accounted for a major process oil market share in 2021, owing to the fact that China's polymer manufacturing sector is one the largest sector in the world which in turn has led the process oil manufacturers to increase their manufacturing capacities.

Furthermore, the personal hygiene & beauty sector in India is witnessing a significant growth owing to increasing number of newborns and rise in awareness regarding self-beauty and self-grooming activities where process oil is widely used to produce various cosmetic formulations. For instance, according to a report published by United Nations Children's Fund (UNICEF), around 67,385 babies are born in India, that’s one sixth of the world’s child births. This is anticipated to increase the sales of process oil among the growing personal care & hygiene sector; thus boosting the growth for the process oil market in Asia-Pacific.

Key players operating in the global process oil market include Behran Oil Co., Chevron Corporation, Exxon Mobil Corporation, Gandhar Oil Refinery (India) Limited, HF Sinclair Corporation, Indian Oil Corporation Ltd., LODHA Petro, Process Oils Inc., Shell Plc., and Total Energies.

COVID-19 analysis

The process oil market was negatively impacted due to the COVID-19 pandemic. However, the personal care sectors have shown an impressive growth during the COVID-19 period where process oil is used as an intermediate for producing various cosmetic formulations. For instance, according to a report published by India Brand Equity Foundation, the personal care sectors is expected to reach $20 billion by 2022, driven by rise in disposable income of middle class and growing aspirations of people to live a good life and look good. This may enhance the performance of the process oil market post COVID-19 period.

Furthermore, the process oil market is expected to recover rapidly post COVID-19 situation due to its increased dependency over tire & rubber, polymer manufacturing, agriculture, and other sectors. Moreover, the rise in sales of automotive vehicles may surge the demand for high-quality tires where process oil is used to enhance the traction and weather resistance of tires during critical weather conditions. This is expected to enhance the performance of the process oil market post- COVID-19 scenario.

Key findings of the study

• By type, the naphthenic segment is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 3.4% from 2022 to 2031.
• By application, the tire & rubber application segment is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 3.5% from 2022 to 2031.
• By region, Asia-Pacific garnered the highest share of 40.6% in 2021, in terms of revenue, growing at a CAGR of 3.8%.