The U.S. re-refined base oil market is expected to grow at a CAGR of 6.56% during 2022-2027
The following factors are likely to contribute to the growth of the U. S. re-refined market during the forecast period: • Increasing Re-refining Capacity & Used Oil Collection in the U.
New York, June 24, 2022 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "U.S. Re-refined Base Oil Market- Industry Outlook and Forecast 2022–2027" - https://www.reportlinker.com/p06288144/?utm_source=GNW
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• Increasing State Regulation Regarding Re-refining of Used Oil
*MARKET INSIGHTS*
Re-refining of used base oil is a process that removes all impurities, including dirt, additives, and water, from used oil through methods such as vacuum distillation, hydrotreating, clay treatment, and solvent extraction technology. These waste oils are collected from garages, maintenance shops, automotive companies, and marine industries and are taken to a refinery and are re-refined to produce Group I, Group II, and Group III base oil.
The U.S. re-refined base oil market is an established market owing to the well-established infrastructure for the collection of used oil and the continuous effort of the government to reduce its carbon footprint. Over the last decade, used oil collection has grown significantly in the U.S., driven by stringent policies by respective states and the U.S. Environmental Protection Agency (EPA), including the Resource Conservation and Recovery Act (RCRA), which regulates the management of hazardous and non-hazardous waste. According to the U.S. Department of Energy (DOE) data, around 30% of the used oil collected is re-refined as a base oil in the U.S.
Critical Insights on Re-refined Base Oil Market
• Every year the U.S. generates more than 1.3 billion gallons of waste motor oil. Out of it, less than 75% of it is being re-refined.
• Every year California generates more than 100 million gallons of waste oil. Out of it, only 10% of that waste oil is recycled to produce lubricants.
• Since 1992, the City of Chicago has been using re-refined base oil in all its vehicles, including police and accessible vehicles.
• Most trucks, cars, and fleet are running on lubricants manufactured from re-refined base oil, including Frito-Lay, Cal Trans, US Postal Service, and every new Mercedes Benz vehicle.
Recent Developments:
• Safety-Kleen’s parent company, Clean Harbors, announced an agreement with Vertex Energy, Inc. to acquire certain used motor oil collection assets and re-refinery business. This deal furthers the company’s commitment to sustainability and is expected to further its reach in the renewable lubricants and fuels sector.
• Safety-Kleen system is expanding its re-refining base oil operation in the Northeast part of the U.S.
*MARKET TRENDS & DRIVERS*
Preserve Energy & Natural Resources
Preservation of natural resources is one of the prime factors leading to the broader acceptance of the re-refining process across the U.S. With the increasing population, industrialization, and modernization, the consumption of natural resources such as fossil fuels is increasing. However, the continuing depletion of fossil fuels (crude oil) can lead to scarcity and undermine economic activity. In addition, the burning of fossil fuels results in air pollution. Therefore, the growing awareness among the population for preserving the environment leads to adopting environment-friendly processes to produce base oil. The use of a re-refined base oil process is helping to slow down the depletion of crude oil, save energy and restrict environmental pollution. Because waste oil, rather than crude oil, is used in the re-refining process to produce base oil. Thus, in this way, it preserves the energy & natural resources.
Increasing U.S. regulation regarding re-refining of used oil
With the increasing sustainability trend across the energy and transportation sector, reducing carbon footprint, and rising demand for premium base oil, the refining base oil process is gaining momentum. The growing trend regarding environmental sustainability has changed the perception of used oil management. Hence, consumers have become reluctant to dispose of used waste oil in sewage or waterways or burn it off. However, the burning of used oil continues, especially in undeveloped or developing nations, due to the lack of awareness and proper collection unit of waste. Therefore, several local and national governments have implemented various management and regulatory programs to encourage the collection and refinement of used oil through incentives, legislation, and penalties, based on the problem and how best to collect and manage used oil.
Some regulations regarding re-refining of used oil
• Texas has laid down rules on the re-refining of used oil under the guidance of the EPA (Environmental Protection Agency).
• All states in the U.S. have regulated EPA’s national pollutant discharge elimination system (NPDES) of the clean water act under respective states’ surface water quality standards.
High Cost of Processing Used Base Oil
One of the major restraints hindering the market’s growth is the processing cost of used base oil. Overall, the re-refining process encompasses two significant steps (collection of waste oil & manufacturing of it, which involves the installation of a sophisticated manufacturing unit), which makes the cost of operation high, thereby resulting in inflated product cost. The price of a product plays a significant role in the purchase decision of individuals. An individual evaluates the following two costs while purchasing a product in the market.
• Upfront Cost
• Installation Cost
*SEGMENT ANALYSIS*
Group II is the largest U.S. re-refined base oil market segment.
The market for re-refined base oil is divided into three segments respect to their Group, Group I, Group II, and Group III. Group II-refined base oil is expected to dominate the market during the forecast period and witness higher growth. Automotive and industrial lubricant manufacturers prefer group II re-refined base oil over the Group I due to the low sulfur content, volatility, and viscosities. The increasing demand for automobiles, growth of aviation, and commercial road transport, in the U.S. are expected to contribute to the growing demand for group II re-refined base oil products in the U.S.
Hydrotreating is the largest segment and is projected to witness similar growth during the forecast period owing to its ability to deliver quality base oil products more than other processes. It improves base stock quality, color, and color stability and also reduces the level of sulfur, nitrogen, halogen, oxygen, and metals compounds. It is primarily used to produce group II base oil.
Automotive oil is the largest and fastest-growing segment in the re-refined base oil market.
Re-refined base oils are primarily used across automotive oil, industrial oil, process oil, grease, metalworking fluid, and hydraulic oil. In the future, automotive oil is also expected to dominate the market during the forecast period. Automotive engine oil is designed for light, medium, and heavy commercial vehicles, passenger cars, and two- and three-wheelers. Automotive oil plays a vital role in engine performance, protecting against wear and tear of moving parts in an engine.
The U.S. automotive industry is one of the largest and most successful industries globally. In 2020, the country reported production of around 8.8 million vehicles. Similarly, as per the American Automotive Policy Council data, motor vehicle production will increase to an average of 12 million vehicles per year through 2025. Thus, presenting a significant opportunity for the automotive oil products in the U.S.
The Southern US region was the second largest and is forecasted to be the fastest-growing market for re-refined base oil from 2022-to 2027. Texas and Florida led the region. The demand for re-refined base oil in Southern US is driven by stringent regulations concerning waste oil, emission regulation, and the growing trend of sustainability aspect. In addition, the booming automotive industry, manufacturing, and construction industry are also supporting the market growth. BMW, Ford Motor, General Motors, Nissan Motor Company, Kia Motors, and Toyota Motor Corporation are some automotive players operating in the Southern region of the U.S. and consume a significant chunk of base oil.
Segmentation by Group
• Group I
• Group II
• Group III
Segmentation by Technology
• Clay Treatment
• Vacuum Distillation
• Solvent Extraction
• Hydrotreating Process
• Others
Segmentation by Application
• Automotive Oil
• Industrial Oil
• Process Oil
• Metalworking Fluid
• Grease
• Others
Segmentation by Region
• South
• West
• Northeast
• Midwest
*COMPETITIVE STRATEGIES*
The competitive scenario in the U.S. re-refined base oil market is currently intensifying. Heritage-Crystal Clean, Vertex Energy, Puraglobe, and Safety-Kleen Systems are a few prominent players. The U.S. re-refined base oil is one of the consolidated markets across the verticals of base oil. The market has comparatively low entry barriers that push vendors to consider innovation and differentiation in their client offerings. Vendors usually gain an edge over their competitors through differentiated offerings, ranging from updating the product feature to adopting a region-specific market expansion strategy.
The major companies operating in the market are Safety-Kleen Systems (Wisconsin, U.S.), Heritage-Crystal Clean (Illinois, U.S.), Amalie Oil company (Florida, US), Puraglobe (Florida, US), Evergreen Oil (Clean Harbour Inc) (California, U.S.), and Vertex Energy (Texas, U.S.) among others. These companies continually compete for the leading position in the market, with ongoing competition from local vendors.
Key Vendors
• Heritage-Crystal Clean
• Safety-Kleen System
• Universal Environmental Services
• Universal Lubricants
• Vertex Energy
Other Prominent Vendors
• AGC Refining & Filtration
• Amalie Oil Company
• Combo Lube
• Evergreen Oil
• Emerald
• Hicks Oil
• Noble Oil Services
• Puraglobe
• Rock Oil Refining
• Recoil
*KEY QUESTIONS ANSWERED*
1. HOW BIG IS THE US RE-REFINED BASE OIL MARKET?
2. WHAT IS THE GROWTH RATE OF THE US RE-REFINED BASE OIL MARKET?
3. WHO ARE THE KEY PLAYERS IN THE US RE-REFINED BASE OIL MARKET?
4. WHAT ARE THE LATEST TRENDS IN THE US RE-REFINED BASE OIL MARKET?
5. WHAT ARE THE GROWTH ENABLERS IN THE US RE-REFINED BASE OIL MARKET?
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