Cetane Improver Additives Market size is forecast to reach $961.5 million by 2025, after growing at a CAGR of 4.85% during 2020-2025, owing to the wide usage of cetane improver additives in diesel fuel and biodiesel to increase the cetane number of blends, shortening the ignition delay period, and extending the combustion duration. Stringent government regulations, pertaining to the mandatory blending of biodiesel with diesel and increasing diesel fuel consumption in power generation and other application areas globally is anticipated to play a key role in driving the cetane improver additives market during the forecast period. However, the rise in prices of chemical compounds used in cetane improver additives poses a challenge for the market.
Asia Pacific dominates the cetane improver market, owing to the increasing automotive production in the APAC region. According to OICA, in 2018 the production of light commercial vehicles has increased by 10.2 % in the APAC region.
Cetane number improvers offer various advantages such as easy ignition of fuel, lowering smoke emission, wear reduction, smoother engine operation, among others due to which the demand for cetane improver additives are substantially increasing.
With increasing awareness about the harmful effects of low cetane number diesel fuel, various governmental agencies, fuel producers, and consumers are increasingly adopting high cetane number diesel fuels. The increase in cetane number for diesel fuel will boost the demand for cetane improver additives during the forecast period.
Cetane improver additives are prepared by a reaction between isooctanol and dichloromethane with sulfuric and nitric acid, which is derived from crude oil. Thus, fluctuation in the crude oil prices, affects the cetane improvers additives price.
Due to the COVID-19 pandemic, most of the countries have gone under lockdown, due to which operations of various industries such as automotive has been negatively affected, which is hampering the cetane improver additives market growth.
By Type – Segment Analysis
The 2-Ethlyhexyl Nitrate (EHN) segment held the largest share in the cetane improver additives market in 2019. 2-Ethylhexyl Nitrate is the most widely used diesel fuel additive to improve the Cetane number. EHN not only improve the cetane number of diesel oil and the quality combusting of fuel oil but also improve the thermo kinetics of vehicle and save oil. It can be injected or pumped at the fuel refinery itself or can be added at the use source such as the vehicle fuel tank or machines fuel tank. It can also be added directly or as a mixture with other fuel additives. 2-Ethylhexyl nitrate (EHN) has been used as a commercial cetane improver for a number of years and currently is the predominant cetane improving additive in the marketplace. It is used at dose levels typically varying from 0.05% to 0.4% (m/m), to yield about 3 to 13 cetane number improvement. EHN has become the most common ignition improver due to its low production costs and good response in a wide range of fuels. Therefore, owing to these factors, it finds application in various end user industries that use diesel as a fuel for their work.
By Diesel Type – Segment Analysis
The petroleum diesel segment held the largest share in the cetane improver additives market in 2019. Oil and gas play an important role in the energy mix and is forecast to account for 44% of worlds primary energy supply in 2050 according to DNV GL. According to US Energy Information Administration (EIA), global petroleum and liquid fuels demand is expected to average 92.6 million b/d in 2020, a decrease of 8.1 million b/d from 2019. Lower global oil demand growth for 2020 reflects growing evidence of disruptions to global economic activity, due to result of COVID-19 restrictions. Further, EIA states that steady increase in consumption of gasoline and diesel will be discern in the second half of the 2020. The Organization of the Petroleum Exporting Countries (OPEC), demand for petroleum product is expected to rebound during forecast period. The crude will surge by 25% in 2021 to average 29.8 MMbpd, higher than the level required in 2019. Cetane improver are diesel fuel additives that, when applied at low concentrations, increase the amount of cetane in the mixture. The growth in the diesel demand and consumption will drive up the market of cetane improver additives during the forecast period.
By Distribution Channel – Segment Analysis
The B2B segment held the largest share in the cetane improver additives market in 2019. Innovations in automation and monitoring allow B2B to manage operations more efficiently and to take informed decisions on shipping, staff and storage. The technology has made shipping more effective than ever in 2018 for B2B. Increased growth will also allow B2B sellers to handle and to analyze data easily with AI and machine learning expansions in supply of cetane improver. The increased B2B penetration in developed countries is the main factor driving growth in the Cetane Improver market. Refineries are constantly trying to reduce costs while meeting ever-increasing fuel regulations. To meet all the regulations cetane improvers are used to enhance the fuel economy and power. Cetane improver has excellent precision and correlation, which allows refineries to run their process closer to the specification limit for the cetane number which leads to significant cost savings due to reducing the amount of cetane improver needed. Where cetane improver sales through B2B sales can be incorporated, which enhances the market growth.
By Application – Segment Analysis
The direct marketing segment held the largest share in the cetane improver additives market in 2019. Direct market includes oil refinery where majority of the cetane improver is being utilized. There are approximately 160 types of crude oil across the world. These are being bundled into four primary types, based on their properties such as light distillates (very light oils), middle distillates (light oils), medium oils and heavy fuel oils which contains different grades of fuel oils, diesel, kerosene, petroleum, naphtha and many more. West Texas Intermediate (WTI), Brent Crude, OPEC Basket and Russian Export Blend are considered as benchmark of crude oils for oil pricing across the globe. WTI is also called as Texas light sweet crude due to its properties such as relatively low density, sweet in nature and low sulfur content. WTI is a premium crude oil which is lighter and sweeter compared to Brent, Dubai crude and Oman crude. Each crude oil has its own Cetane Number and other properties which can be changed as per climatic conditions and other factors. Diesel is extracted from crude oil by fractional distillation process carried in oil refineries. As mentioned above there are several types of diesel blends and have different ranges of Cetane Number individually. Cetane improver is used in oil refineries to meet the different diesel fuel standards of government authorities across the regions. Average dosage of Cetane improver used in oil refinery is 200 parts per million in orders to raise 1 point of Cetane Number. Cetane Number is mainly determined by standard engine test as stated by American Society for Testing and Materials (ASTM D613). Due to the current pandemic of COVID-19 caused by the new Coronavirus SARS-CoV-2, a delay in production and supply through direct market may postpone the schedule, thereby affecting the future demand for direct market in the industrial sectors and creating hurdles for the Cetane Improver Additives Market in 2020.
By End-Use Industry – Segment Analysis
The transportation industry held the largest share in the cetane improver additives market in 2019 and is growing at a CAGR of 4.86%, as cetane improver increases the efficiency while reducing the wear of engine’s cylinder. Technology advancement and new R&D initiatives are transforming the automotive industry. According to the Association of Global Automakers, automakers spent more than $125 billion globally on research & development in 2018. Thus, flourishing automotive industry may drive the growth of the Cetane Improver Additives market. According to the Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990–2018, transportation accounted for the largest portion (28%) of total U.S. GHG emissions in 2018. Thus, accelerating the use of cetane improvers to boost fuel efficiency and reduce harmful emissions will augment the market growth. Furthermore, the use of cetane improvers for quicker ignition of the fuel and increased power per stroke for easy transportation of bulky goods also drives the growth of the market. The International Maritime Organization (IMO) regulation, IMO 2020 which abandon ships from using fuels with a sulfur content above 0.5%, compared with 3.5% earlier is expected to provide major opportunities for the growth of the cetane improvers. All these factors are driving the market growth in the transportation industry during the forecast period.
By Geography – Segment Analysis
Asia Pacific region held the largest share in the cetane improver additive market in 2019 up to 35%, owing to the increasing transportation industry in the region. According to China Automotive Association, in 2018 the vehicle production increased by 30% and the number of newly registered passenger vehicles increased by 23.14 million. So, china’s automobile industry has attracted many well-established foreign brands to invest in their automotive industry. Trucks made up almost 90% of commercial vehicles in 2017, and within the truck category, 1.1 million heavy-duty trucks and 229,113 medium-duty trucks were sold in China. Total demand for passenger cars and commercial vehicles in Japan in 2017 was 5.19 million units, an increase of 2.2% from the previous fiscal year, with sales of passenger cars and CVs, excluding mini-vehicles, totaling 3.34 million units, down 0.7% from fiscal 2016, and sales of mini-vehicles reaching 1.86 million units, up 7.9%. The commercial vehicle sector in South Korea accounts for 10% of the country’s automotive market. In 2017, there were 4.2 million vehicles manufactured in South Korea, of which 3.6 lakh vehicles were commercial vehicles. The prominent factors such as general growth of APAC economy and continued high levels of infrastructure spending will increase the sales of heavy-duty trucks and commercial vehicles, in turn, positively impacting the Cetane Improver Additives Market in the Asia Pacific region.
Drivers – Cetane Improver Additives Market
Increasing demand for higher cetane number diesel fuel to improve engine efficiency and reduction in emission
Cetane improver additives enhance the combustion process of diesel fuel, ensuring high levels of fuel efficiency and emission reduction. Cetane number is a measurement of the quality of diesel fuel. With increasing awareness about the harmful effects of diesel fuel with low cetane number, various governmental agencies, fuel producers, and consumers are increasingly adopting high cetane number diesel fuels. The most important factor impacting the demand for high cetane number diesel fuel is the stringent regulations regarding the minimum limit of cetane number for diesel fuel imposed by various countries. For instance, new China-VI regulations introduced in 2017 have increased the minimum limit of the cetane number required for diesel fuel in China. There are additives such as cold flow improvers that improve the injector flow of engines, thereby preventing clogging. They protect and improve the overall performance of the vehicle, by removing junk items that are capable of harming injectors and other internal parts. The increase in the cetane number for diesel fuel will propel the demand for cetane improver. The trend towards higher cetane number diesel fuel is expected to accelerate further during the forecast period.
Rising demand for cetane improver additives to enhance the performance and stability of biodiesel blends
Transportation fuels have become increasingly important to the world economy due to its employment to energize the transportation industry. However, emission of harmful pollutants such as NOx (nitrogen oxides) and particulate matter from conventional petroleum-based engines is a concerning issue. Faster depletion and increased emission of fossil fuels are the motivating factors for the development of alternative energy sources. Therefore, biodiesel is gaining momentum as an alternative to petroleum diesel, since the properties of the biodiesel are close to that of diesel. Biodiesel entails some advantages over diesel as the former has inbuilt oxygen, which helps in reducing the emissions such as CO2, HC, and Particulates. Additives such as oxygenates, bio-additives, and cetane number improvers are used to improve the fuel qualities such as viscosity, heating value, and others, in addition, cetane improvers are used to increase the cetane number of the fuel. Combustion of biodiesel blends causes water separation and fuel foaming, which is not the case with pure fossil fuels. Also, biodiesel does not ignite as quickly as general diesel, and thus, for better ignition, cetane improvers need to be added. The addition of cetane improver additives reduces the ignition delay, which in turn minimizes the combustion temperatures. Therefore, to enhance the performance and stability of biodiesel blends the demand for cetane improver additives is increasing.
Challenges – Cetane Improver Additives Market
Growing Adoption of Electric Vehicles
The automotive industry is the major end-use customer for cetane improver additives. Most of global fuel is consumed by the transportation sector alone. According to the Environmental and Energy Study Institute, fossil fuel-powered vehicles account for 32% of the global CO2 emission. With the aim to reduce this carbon footprint, most of the developed economies in the world are shifting towards electric-powered vehicles, which produce less emission compared to other normal combustion engines. Norway, the Netherlands, and Japan are the frontrunners in the electronic vehicle segment. The policy of France to banish all diesel and gasoline powered vehicles by 2025 can be considered as an initiative to adopt electric powered vehicles. Also, many governments are making investments in EV-enabling infrastructure such as charging stations and special parking spots. For instance, the government of Estonia installed fast chargers throughout the country (165 in total) to ensure that every city with at least 5,000 inhabitants hosts at least one station. Also, in January 2020, U.K government announced to double the funding for the installation of electric vehicle charge points on residential streets to £10 million ($13.06 million). In June 2017, Clean Energy Ministerial launched a campaign EV30@30 to accelerate the utilization of electric vehicles across the globe. This led to increased number of electric vehicles and is anticipated to further increase the manufacturing of electric vehicle in the coming years. According to the International Energy Agency, over 1 million electric cars were sold in 2017, with more than half of global sales in China. The total number of electric cars on the road surpassed 3 million worldwide, an expansion of over 50% from 2016. In 2018, 3.29 million electric vehicles deployed globally and according to IEA, the number is expected to increase by up to 125 million by 2030. Therefore, the growth in electric vehicle adoption is anticipated to hinder cetane improver additives market growth.
The emergence of COVID-19 pandemic
The emergence of COVID-19, which is declared a pandemic by the World Health Organization, is having a noticeable impact on global economic growth. According to International Monetary Fund, the global GDP is expected to decline by 3% in 2020. According to World Trade Organization (WTO), global trade volumes are projected to decline between 13% and 32% in 2020 as a result of the economic impact of COVID-19. According to International Energy Agency (IEA), total global passenger car sales this year is set to decline by 15% due to the COVID-19 pandemic. According to the Society of India Automobile Manufacturers (SIAM), passenger vehicle sales declined 51% to 143,014 units in March 2020 in India. Also, sales of commercial vehicles declined 88% to 13,027 units, those of two-wheelers fell 40% to 866,849 units. The COVID outbreak has crashed the automotive industry tremendously. The U.S. is anticipated to witness a decline of 27% in automobile sales in 2020. As automotive industry is one of the major end use industries of cetane improver additives, COVID-19 pandemic has deteriorated the automotive industry which is affecting the cetane improver additives market.
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the cetane improver additives market. In 2019, the market of cetane improver additives has been consolidated by the top five players accounting for 83.4% of the share. Major players in the cetane improver additives market are Eurenco, Innospec Specialty Chemicals, The Lubrizol Corporation, Afton Chemical, EPC Groupe, Kutch Chemical Industries Ltd., Deepak Nitrite, BASF SE, NITROERG S.A., and Cetpro Ltd. (Maxam).
In September 2018, Afton Chemical has completed of the Phase II expansion of its Chemical Additive Manufacturing Facility in Jurong Island, Singapore.
In July 2017, Afton Chemical has completed the acquisition of Aditivos Mexicanos, S.A. de C.V. (AMSA), petroleum additives manufacturing, sales and Distribution Company based in Mexico City, Mexico.
In June 2019, Baker Huges, a GE Company and C3ai has formed a joint venture agreement that bring together BHGE’s fullstream oil and gas expertise with C3.ai’s unique AI software suite to deliver digital transformation technologies that will drive new levels of opportunity for oil and gas industry.
In January 2020, to support the Chinese transportation industry with cutting edge technology and traditional capacity, Infineum, a global leader of fuel and lubricant additives, held a ceremony with the Zhangjiagang Free Trade Zone on 8th January 2020 to mark the signing of the letter intent to begin its integrated manufacturing base phase II project in Zhangjiagang, Jiangsu province.