Frost & Sullivan: Tightening Regulatory Environment and the Declining Quality of Crude Oil Drive the Fuel Additives Market in India
April 17, 2014 - Mumbai, Maharashtra, India
New analysis from Frost & Sullivan, Strategic Analysis of the Indian Fuel Additive Market, finds that the market earned revenues of US $49.2 million in 2013 and estimates this to reach $62.4 million in 2017. This is against a global market of US $3.5 billion in 2012 indicating a market of low maturity where about 90 percent of additives are added at the refinery level. With the mandate to follow Bharat Stage emission standards, the use of fuel additives will become increasingly imperative. Additives for petrol will witness a slightly faster growth than diesel due to the marginally higher demand for petrol vehicles and also the fact that a major portion of diesel vehicles are used for commercial applications where lessening costs are more important than marginal improvement in the vehicle efficiency.
“Escalating crude oil prices and availability issues due to political unrest in the Middle East are forcing refiners to process heavier and sour crude,” said Frost & Sullivan’s Chemicals, Materials & Foods Research Analyst. “This is increasing the demand for additives to enable conforming to fuel regulatory standards.”
While it offers many benefits such as cleaner engines, lower pollution, improved engine ignition, prevents gumming and icing, higher fuel efficiency etc., the additional cost fuel additives attract over normal fuel is a deterrent in the cost-sensitive Indian market. Cheaper fuel options such as liquefied petroleum gas (LPG) and compressed natural gas (CNG) also limit the adoption of fuel additives. Awareness about fuel additives is quite low in India as evident by the fact that only oil companies use it and its non-availability as a retail product unlike in the developed countries. “Communicating the need for and the long-term advantages of fuel additives will go a long way in supporting the uptake of fuel additives,” noted the analyst. “Customers with higher spending power and environmental consciousness will be open to spend a little more once they are aware of what they get in return.”
There are various types of fuel additives, and some of the commonly used ones are Deposit Control additives (to prevent and remove deposit build-up in fuel injection systems), Cetane improvers (to reduce ignition delays, allowing complete combustion and reducing emissions), Antioxidants (to prevent gum formation and to maintain fuel stability) and Lubricity Improvers (to aid in reducing the wear and tear of the fuel injection system and improve the engine’s life). Currently, the Indian fuel additives market is dominated by four participants with few small, niche players. Since innovation is vital to differentiate products in this highly competitive market, joint ventures as well as mergers and acquisitions can be expected in the forecast period.
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Strategic Analysis of the Indian Fuel Additive Market is part of the Chemicals & Materials (http://www.chemicals.frost.com) Growth Partnership Service program. Frost & Sullivan’s related studies include: Strategic Analysis of the Global Lubricant Market and the Impact of Bio-based Feedstock, US Automotive Fuel Additives Markets, CEO 360 Degree View of Chemicals used in Transportation, CEO 360 Green Fuels and Chemicals. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Source: Business Wire India