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The global fuel additives market size was USD 7,701.0 million in 2020 and is projected to reach USD 12,117.8 million by 2028, exhibiting a CAGR of 5.8% during the forecast period. Fuel additives are special chemicals designed to improve the various properties of fuels such as octane ratings, cetane ratings, and others.
The global fuel additives market is projected to witness substantial growth due to the increasing demand for advanced and improved products from automobiles and other end-use sectors. Another main driver that is expected to drive the global market is the stringent regulations imposed by government industries. Moreover, favorable government policies and increasing awareness regarding carbon emission control will contribute positively to the market.
COVID-19 Pandemic: Fall in demand for Fuel and Fuel Additives
The pandemic has rigorously affected the various end-use sectors. In the automotive industry, due to shut down in operational activities, the market witnessed a decrease in demand. Due to the COVID-19 outbreak, automobile manufacturers in Europe had to comply with the lockdown imposed by the government and temporarily shut all the manufacturing activities. As to cope with the outbreak, certain companies had to halt production at plants in Europe. For instance, as directed by the different state governments, many Indian automakers such as Maruti Suzuki, Mahindra, Hyundai, Tata, and others suspended the production activities at the respective manufacturing facilities. However, stringent regulations and code of conduct imposed by governments to curb the spread of infection had significantly reduced the demand for fuel. Strict lockdown and curfew resulted in the fall in demand for fuel and fuel additives.
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Increasing Research and Usage of Ultra Low Sulfur Diesel
Ultra-Low Sulfur Diesel is a diesel with substantially low content of Sulfur. ULSD potentially reduces the exhaust production of particulate matter and ozone precursors in the atmosphere and therefore is highly implemented for off-highway applications such as aerospace and marine applications. The use of ULSD is one of the applications of advanced lower-emission technologies that potentially lowers the release of harmful gases from diesel combustion. Regulations set up by the European government have mandated the reduction of diesel sulfur content and implemented modern ULSD specifications. However, the ULSD needs lubricity improvers to maintain its performance. Increasing demand for such low-sulfur fuel is one of the trends that is expected to bolster the fuel additives market growth.
Stringent Regulations Imposed by Government Authorities to Propel Market Growth
Fuel Additives are expected to experience a high growth rate due to the high demand for fuel from various sectors. The fuel additives industry is a development-intensive industry. A wide range of products has been developed to meet the demand from industries that convert hydrocarbon fuels to heat energy for various purposes such as transportation, electricity generation, and others. According to the data from ATC, 95% of on-road retail fuel is treated with performance additives, holding almost half of the volume with the remaining being sold into refineries and other terminals. This ensures the production within the standards set by the European government. Additionally, increasing research and development regarding the ultra-low Sulphur diesel will fuel market growth.
Stringent regulations regarding carbon emissions from automobiles and refineries are anticipated to boost the market growth. Increasing concerns regarding air pollution that occur due to the incomplete and complete burning of hydrocarbons are one of the factors influencing growth and development in the product portfolio of these additives. For instance, the Clean Air Act clearly suggests the addition of detergents and deposit control additives to lower the emissions of carbon monoxide. Additionally, a wide range of products for the different types of fuels enhances the performance of the fuel. Engines and machines often experience operational problems due to fuels, which can be overcome by additives. They are mostly utilized in refineries, distribution systems, and even in storage tanks of different transport systems and vehicles.
Degrading Quality of Crude Oil to Drive the Market
Petroleum oils are easily photo-oxidized due to sunlight exposure and degraded due to the presence of marine microorganisms that use them as a carbon source. This process of photo oxidation mainly occurs in the oil water interface which further produces a large variety of products that degrade the quality of the petroleum oil that is extracted. Under certain conditions, both of these factors together speed up the oxidation process. Fuel additives eliminate the carbonaceous deposits from the walls of the combustion chambers. Moreover, the continuous exploitation of crude oil reserves to obtain petroleum oil and natural gas is one of the factors degrading the quality of the crude oils. Increasing demand for these additives to maintain the quality and meet the standards set by the government organizations is predicted to propel market growth.
Rise in Demand for Alternative Fuels May Hamper the Market
Different types of clean energy sources have been developed over the last few years. Increasing concerns regarding carbon emissions and air pollution have significantly developed the need for clean energy sources. The use of batteries in vehicles and automobiles is one of the latest technologies developed for sustainable living. Electric vehicles (EVs) are being preferred by transportation providing organizations, companies, and governments to practice sustainability as well as to support the use of clean and green energy sources.
Cetane Improvers Segment to Generate High Revenue Due to High Demand from End-Use Industries
Based on type, the market is segmented into deposit control, cetane improvers, lubricity improver, cold-flow improver, stability improver, octane improver, and corrosion inhibitors. Cetane number is the parameter for indicating the ignition properties of fuel relative to the standard cetane number. Cetane improvers are highly employed in diesel fuel. Its exothermic decomposition leads to fuel reactions, which results in the start of combustion at a lower temperature.
Octane improvers are one of the major segments in the global market. A higher octane number of fuel indicates higher performance. The increasing demand for octane improvers from petroleum refineries due to their cost-effectiveness to meet the octane number specifications will propel market growth. Deposit control additive and stability improvers are in demand due to the decreasing quality of crude oil and petroleum oils.
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Gasoline Segment to Hold a Significant Share Due to Growth in Automotive Sector
The market is segmented into gasoline, diesel, and aviation fuel in terms of application. The gasoline segment constituted the leading market share in 2020. The growing demand for gasoline fuel supported by the increasing automotive production is one of the prime reasons driving the market. Besides, the increasing demand for aviation, fuel for commercial application owing to the increasing tourism is expected to drive the market's growth.
North America Fuel Additives Market Size, 2020 (USD Million)
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The market size in North America stood at USD 2,534.93 million in 2020. North America dominated the market and is likely to maintain its position during the forecast period. Increasing petroleum exploration activities and high demand for fuel from various end-sectors including transportation, power generation industries, and others shall potentially boost the market growth. In addition, the rapidly expanding aerospace and defense sector coupled with various government rules and regulations in the United States (U.S.) shall propel regional growth. For example, in 2007, the Environmental Protection Agency (EPA) mandated the use of ULSD for diesel engines with newer emission control technologies that need a new type of fuel. Implementation of this rule has considerably boosted the demand for lubricity improvers.
Europe is expected to witness considerable growth in terms of volume. The well-established automotive manufacturing sector and the increasing demand for passenger vehicles are expected to drive the market in the region. Additionally, the presence of organizations such as, Additive Technical Committee (ATC) that supports the growth of the additive industry will influence growth.
Asia Pacific is one of the thriving regions in terms of development and industrialization. The fuel additive industry is anticipated to grow significantly due to the high demand from countries such as China and India. In addition, increasing efforts of automotive enterprises such as Tata, Bajaj, Ashok Leyland, and others to develop enhanced vehicles shall drive the demand.
Latin America is experiencing significant development and industrialization. Brazil, Mexico, Argentina, and Columbia are the key growth countries for the market due to their strong industrial sector. Increasing mining activities in Brazil and other Latin American countries is driving the demand for fuels, further supporting the market growth.
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Population growth and growing tourism in UAE, due to the hosting of mega-events like trade fairs, conferences, Expo and others are key growth factors for the fuel industry. Increasing tourism and transportation shall positively impact market growth. The UAE and Qatar are expected to be lucrative countries for the fuel additive industry as they move on with initiatives to support tourism ahead of Expo 2020 and FIFA World Cup 2022.
Key Companies to Adopt Strategies and Broaden their Market Presence
With a few global players capturing a significant share, the global market is concentrated in nature. BASF, Lubrizol Corporation, Evonik Industries, Innospec Inc, Infinuem Ltd, Chevron Oronite, Cerion LLC, Albe Marle, Clariant, Chemtura, Total Additives and Special Fuels, Lanxess, and Dow Inc. are some of the market's key players.
Industry players operate principally based on the product's price and application characteristics. To boost their market share and achieve a competitive advantage, several major players are engaged in numerous strategic alliances to promote brand and sales. For instance, BASF SA launched a new diesel additive in South Korea, which is available through Coupang, an e-commerce company.
An Infographic Representation of Fuel Additives Market
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The market research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, products, and raw materials. In addition, the report offers insights into market trends and highlights vital industry developments. In addition to the factors mentioned above, the report encompasses various factors that have contributed to the market's growth in recent years.
This report includes historical data and forecasts revenue growth at global, regional, and country levels, and analyzes the industry's latest market dynamics and opportunities.
Value (USD Million) and Volume (Tons)
Type; Application; and By Region
Fortune Business Insights says that the global market size was USD 7,701.0 million in 2020 and is projected to reach USD 12,117.8 million by 2028.
In 2020, the North America market size stood at USD 2,534.93 million.
Growing at a CAGR of 5.8%, the market will exhibit steady growth during the forecast period (2021-2028).
The gasoline segment is expected to be the leading segment in this market during the forecast period.
Stringent regulations imposed by governments regarding carbon emissions to drive the market.
BASF SA, Evonik, Lubrizol Corporation, Total Additives & Special Fuels, and Dow Inc. are major players in the global market.
North America dominated the market share in 2020.
Degradation in the quality of crude oil will drive the adoption.
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