The fuel additives market was estimated at 1,767.83 kiloton in 2020, and the market is projected to register a CGAR of more than 5% during the forecast period (2021-2026).
Fuel additives are widely used to improve the quality and performance of various fuels. With the outbreak of COVID-19 and the lockdown being implemented, the demand for fuel from various industries decreased drastically, which hindered the consumption of fuel additives during the period. International air travel and economic activity being suspended around the world have severely affected the fuel additives market.
- Over the medium term, the enactment of stringent environmental regulations pertaining to greenhouse gas emissions is likely to drive market growth. Increasing consumption of fuels and rising environmental concerns are expected to drive the market studied.
- The increasing demand for battery electric vehicles (BEVs) in countries such as the United States, China, and Germany may hamper the market's growth during the forecast period.
- The accelerating demand for ultra-low-sulfur diesel (ULSD) is likely to act as an opportunity for market growth in the future.
- North America dominated the fuel additives market, owing to the high demand from various applications.
Key Market Trends
Gasoline to Dominate the Market Studied
- As with diesel, gasoline engine technologies and fuels are constantly evolving and providing new challenges. The growth in the consumption of gasoline additive largely reflects the requirements of engine design and developments in refinery operations. The additive cost is less than 0.3% of the average retail gasoline price.
- The fuel additives, which have found application in gasoline engines, are either used in the refinery fuel distribution system or the vehicle system:
- Additives for Gasoline Distribution Systems: Antioxidants, metal deactivators, antistatic agents, corrosion inhibitors, sediment reduction agents, dyes, and de-hazers.
- Additives for Gasoline Vehicle System: Antiknock additive (was tetra-ethyl lead, which is now phased out), anti-valve seat recession additive (also phased out due to metallurgy change in the engines), carburetor detergents (phased out, due to the introduction of injectors), deposit control additives, deposit modifiers, friction modifiers, and lubricity improvers.
- Port injection fuel delivery systems used to be the norm. However, new gasoline direct injection or GDI technology is becoming standard equipment in many new cars, especially in high-performance vehicles. In this innovative fuel delivery system, the injector is placed inside the combustion chamber, yielding improved combustion to produce better performance, improved gas mileage, and fewer emissions. Deposits in GDI systems are extremely hard to remove and require more fuel additives.
- Fuel additives, such as isooctane, have so far been produced from mineral oil. However, a French-German company, Global Bioenergies, started producing bio-based additives for gasoline. The raw material used for bio-based fuel additives is bio-based isobutene, a hydrocarbon from which plastics and elastomers can also be synthesized.
- To prevent air-fuel mixture in the gasoline engine from self-igniting prematurely, additives are included with fuel to increase the knock resistance. In a project funded by the German Federal Ministry of Education and Research (BMBF), the French-German company, Global Bioenergies, aimed to produce two such additives, namely, isooctane and ETBE (ethyl-tert-butyl ether), for the first time from purely renewable resources.
- Hence, such developments are highly likely to create new opportunities for the gasoline fuel additives market.
- However, in 2020, the COVID-19 outbreak has drastically reduced the diesel demand as well as production due to lockdowns being practiced in various parts of the world to curb the spread of the coronavirus. The lockdowns have led to stalled economic and industrial activities and also majorly affecting transit globally.
- With economic activities recovering, the market is estimated to recover by the end of 2021 and is likely to drive the market during the later part of the forecast period.
North America to Dominate the Market
- The United States is one of the world's largest and most powerful economies. The country is estimated to register a GDP growth rate of 3.1% in 2021 compared to -4.3% in 2020, due to the COVID-19 outbreak.
- In 2019, distillate fuel (essentially diesel fuel) consumption by the United States transportation sector was about 1.1 billion barrels. This amount accounted for 15% of total petroleum consumption in the country and, on an energy content basis, for about 23% of total energy consumption by the transportation sector.
- Diesel fuel powers most of the farm and construction equipment in the country. The military uses diesel fuel in tanks and trucks because diesel fuel is less flammable and less explosive than other fuels. Diesel fuel is also used in diesel engine generators to generate electricity, as most of the remote villages in Alaska use diesel generators as the primary source of electricity.
- The diesel fuel slate has changed significantly in the last decade. Most of the diesel fuel in the United States is manufactured and delivered to the market with typical CN of between 43 and 46.
- More than 40 diesel models are available today in the United States from 10 manufacturers and brands.
- According to the U.S. Energy Information Administration (EIA), In 2019, about 3.39 billion barrels of finished motor gasoline were consumed in the country, an average of about 9.27 million barrels per day.
- Most of the gasoline sold in the United States contains some ethanol and is segmented into three general categories of ethanol-gasoline blends, i.e., E10, E15, and E85 (E10 and E15 are the most common).
- The United States is the second-largest market for vehicle sales and production globally. In 2019, automotive sales witnessed a contraction of about 1.8%. However, automakers have been trying to revive the automotive industry by removing their previous automotive models from the domestic market. Moreover, the COVID-19 outbreak has also impacted the automotive industry.
- The market for automobiles was struggling in 2020 due to the rapid rise in the number of new cases across the country. The country produced 6.24 million vehicles in the first nine months of 2020, which declined by 25.1% compared to the same period the previous year. This, in turn, is expected to reduce the growth in the demand for fuel in the coming years as the number of new vehicles operating sees a slow growth.
- Additionally, the government is actively involved in promoting the usage of electric vehicles through programs and initiatives. This has significantly boosted the usage of electric vehicles and affected the consumption of fuel.
- According to EV-volumes, around 328 thousand plug-in vehicles were solid in 2020, which registered a growth of 4% compared to the previous year 2019.
- The United States has the largest aerospace industry in the world. According to the Federal Aviation Administration (FAA), the total active general aviation fleet is expected to increase from 212,875 in 2018 to 211,575 aircraft by 2039, owing to the growth in air cargo. Also, the for-hire air carriers are expected to reach 7,550 in 2020 from 7,475 units in 2018. This is likely to increase the usage of jet fuel in the country.
- All these mentioned factors, in turn, have an impact on the consumption of fuel additives during the forecast period.
The fuel additives market is fragmented in nature. Afton Chemical is the market leader, with an extensive product portfolio of fuel additives, such as gasoline fuel additive packages and diesel fuel additive packages. The major players apart from Afton Chemicals include The Lubrizol Corporation, Innospec Inc., Chevron Corporation, and BASF SE.
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