ILMA Compoundings March 2017 - 25

Increasing lubricant consumption in the Asia-Pacific region is
driving demand for base oils. Industry experts say this trend will
continue as the region's vehicle
population and industrial activity
remain robust. However, some
countries in the region, totally
dependent on imported base oils,
are turning to re-refined base
oils to meet local demand and
reduce reliance on imports.
The global base oil market was
valued at US $30.44 billion in 2015
and is expected to reach US $30.97
billion by 2020 at a 0.3 percent
cumulated annual growth rate from
2015 to 2020 - dominated by
demand from the automotive oils
segments, followed by the industrial
oils segments. In terms of weight,
global demand is forecast to increase
to 39,614.7 kilotons by 2020 at a 1.4
percent cumulated annual growth rate,
with Asia-Pacific expanding its global
share to 41.1 percent, according to
U.S. consulting company Transparency Market Research's report, Base
Oil Market - Global Industry Analysis,
Size, Share, Growth, Trends, and Forecast 2014-2022, released last year.
For countries such as Australia,
Vietnam and Bangladesh, which do
not have their own virgin base oil
plants, sourcing for imported base oils
can be a major challenge for independent lubricant blenders. On the
other hand, countries with their own
base oil plant can have sourcing issues,
too. The large geographical areas of
countries such as China and India,
and even Indonesia, the world's largest
archipelago, with more than 17,000
islands, mean transportation of base
oils can be costly and securing a stable
supply can be problematic.
Down under in Australia, the country's four base oil plants were closed by
2011 because of the closure of major

international blending plants of Shell,
BP, Caltex and Mobil. Although international independent blenders still
manufacture lubricants in the country,
base oil is largely imported from the
Middle East through Asian refineries.
"Independent blenders fill the
remaining gap since the majors pulled
out, and a growing demand is still
there," said Tony Lawton, Manager,
Asia and General Development, Penrite Oil Co. Pty. Ltd.

"Independent blenders fill
the remaining gap since the
majors pulled out, and a
growing demand is still there."
To reduce the country's heavy
reliance on imported base oils, the
Australian government encouraged
re-refineries to recycle used oils into
base oil.
"A waste oil of 8.5 cents per liter was
applied to every lubricating base oil
and additive made in or imported into
Australia, and this came into effect in
2001," said Lawton. The levy is used
to subsidize plant investment, oil
recovery logistics and API testing. The
country also introduced the Product
Stewardship for Oil program to create
a used oil management partnership
between oil producers, recyclers and
various local and state governments.
As the country's strict vehicle
emissions demand quality lubricants,
"Australia is a high-end market, so
Group II and especially Group III
demand will grow, [so] re-refiners may
need to ensure they can make Group
II," said Lawton.
However, some Australian re-refiners are still producing Group I base
oils and are finding new markets

offshore in Asia's emerging markets
including Vietnam, Indonesia, India
and China.
The country's major re-refiner,
Cleanaway, in Rutherford, New South
Wales, is working with a newly set
up distribution company, Reoil Pty.
Ltd., to develop new markets in Asia.
The company is already exporting
Group I and Group II 150-grade base
oil mostly to automotive lubricants
blenders in Vietnam and "currently,
we are exploring a few other locations
as well," Reoil CEO Kyle Bender told
Compoundings.
Another re-refiner, Wren Oil, in
Picton, western Australia, only exports
its Group I re-refined base oil, mainly
to blenders in Asia such as Indonesia,
Singapore, India and Vietnam, for all
types of lubricant applications.
"Our re-refined base oil is in demand
due to its high quality," said Alex
Wren, director of Wren Oil.

"Like Australia, Vietnam
introduced a used-oil
collection law in July 2016."
Like Australia, Vietnam introduced
a used-oil collection law in July 2016.
"The prescribing retrieval and disposal
discarded products law was issued,
and this directive was from Congress,
the highest government office in the
country, and that is good for the environment and for re-refiners," Nguyen
Huu Van, chairman and CEO of VN
Oil Joint Stock Co., told Compoundings in a recent telephone interview.
"This means all lubricant producers
have to collect used lubricants for
treatment, and VN Oil's treatment
plant will be the biggest to recycle
used oil into base oil," he added.

25



ILMA Compoundings March 2017

Table of Contents for the Digital Edition of ILMA Compoundings March 2017

LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
INDUSTRY RUNDOWN
PROVIDING FOODGRADE LUBRICANTS IN A GLOBAL MARKETPLACE
BIODEGRADABLE LUBRICANTS PRIMER
GROUP I RE-REFINERS DOMINATE ASIA-PACIFIC
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK42
PORTRAIT
ILMA Compoundings March 2017 - Cover1
ILMA Compoundings March 2017 - Cover2
ILMA Compoundings March 2017 - 1
ILMA Compoundings March 2017 - 2
ILMA Compoundings March 2017 - LETTER FROM THE CEO
ILMA Compoundings March 2017 - INSIDE ILMA
ILMA Compoundings March 2017 - 5
ILMA Compoundings March 2017 - WHAT’S COMING UP
ILMA Compoundings March 2017 - 7
ILMA Compoundings March 2017 - INDUSTRY RUNDOWN
ILMA Compoundings March 2017 - 9
ILMA Compoundings March 2017 - 10
ILMA Compoundings March 2017 - 11
ILMA Compoundings March 2017 - 12
ILMA Compoundings March 2017 - 13
ILMA Compoundings March 2017 - PROVIDING FOODGRADE LUBRICANTS IN A GLOBAL MARKETPLACE
ILMA Compoundings March 2017 - 15
ILMA Compoundings March 2017 - 16
ILMA Compoundings March 2017 - 17
ILMA Compoundings March 2017 - 18
ILMA Compoundings March 2017 - 19
ILMA Compoundings March 2017 - BIODEGRADABLE LUBRICANTS PRIMER
ILMA Compoundings March 2017 - 21
ILMA Compoundings March 2017 - 22
ILMA Compoundings March 2017 - 23
ILMA Compoundings March 2017 - GROUP I RE-REFINERS DOMINATE ASIA-PACIFIC
ILMA Compoundings March 2017 - 25
ILMA Compoundings March 2017 - 26
ILMA Compoundings March 2017 - 27
ILMA Compoundings March 2017 - BUSINESS HUB
ILMA Compoundings March 2017 - 29
ILMA Compoundings March 2017 - COUNSEL COMPOUND
ILMA Compoundings March 2017 - 31
ILMA Compoundings March 2017 - WASHINGTON LANDSCAPE
ILMA Compoundings March 2017 - 33
ILMA Compoundings March 2017 - IN NETWORK42
ILMA Compoundings March 2017 - 35
ILMA Compoundings March 2017 - 36
ILMA Compoundings March 2017 - 37
ILMA Compoundings March 2017 - 38
ILMA Compoundings March 2017 - 39
ILMA Compoundings March 2017 - PORTRAIT
ILMA Compoundings March 2017 - Cover3
ILMA Compoundings March 2017 - Cover4
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