Stringent government regulation on diesel fuel, particularly in Asia Pacific region is driving the cetane improver additives market growth during the forecast period. 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
The cetane improver additives market is growing at a significant rate as the demand for cetane improver additives are increasing from the automobile industry. Major factors driving the cetane improver additives market include government regulations, especially in countries such as Brazil, U.S., Argentina, Germany, and Spain, among others, pertaining to the mandatory blending of biodiesel with diesel and increasing diesel fuel consumption in power generation and other application areas. In addition, increasing preference for diesel fuel exhibiting complete combustion characteristics along with low exhaust emissions is another factor that is expected to fuel the growth of additives such as cetane improvers, cleaning additives, antifoaming agents, among others.
Cetane improver additives are extensively used in the automobile industry to facilitate better combustion in diesel fuels and to follow stringent government regulations. There are two national diesel fuel standards in China – GB 19147 for on road vehicles and GB 252 (general diesel fuel) –for other applications including non-road engines. China V Emission standards have been set with an objective to decrease sulfur content down to 10 ppm and increase Cetane levels up to the 51 level. The specifications for China V and China VI fuel, GB 19147-2016, were issued in December 2016. The China VI gasoline and diesel standards are generally more stringent than the Euro V fuel standards currently in force in the European Union, although China’s fuel quality standards otherwise mostly follow European precedents. The stringent implementation of diesel standards in various countries such as in China will increase the demand for cetane improvers during the forecast period 2020–2025.
In addition, the COVID-19 pandemic is affecting operations of various industries such as automotive, oil and gas, and others, as most of countries have issued “stay at home guidance” i.e., lockdown. And it is expected that the outbreak of COVID-19 will be seen in the whole year of 2020, and a few months in 2021. The production of automobiles has been disruptively stopped, contributing to a major loss in the total automotive sectors. Different automakers have reported sharp decline in their sales and in the production owing to the COVID-19. Fiat Chrysler reported that its first-quarter sales in the U.S. fell by 10% even though sales were up the first two months of the quarter. Similarly, General Motors reported 7% decline in its sales in the first quarter due to the COVID-19. In U.S., Honda reported 19% decline in first quarter, whereas Hyundai reported 11%. With the decrease in automotive production, the demand for cetane improver additives has significantly fallen, which is having a major impact on the cetane improver additives market.
The Asia Pacific holds a major share of the cetane improver additives market due to the increasing transportation sector in the region. According to OICA, of the 29 million vehicles produced and sold by China’s automakers in 2017, around 25 million were passenger cars and four million were trucks and buses. South Korea stands out as the fifth largest automobile manufacturing country in the world, following China, the U.S., Japan, and Germany. In 2017, according to the International Trade Administration (ITA), 1.2 million new passenger cars, SUVs, and commercial vehicles were sold in the Australian market, an increase of 0.9% from 2016. In addition, according to OICA, in 2018 the automotive production in India, Thailand, Indonesia, and Malaysia has increased up to 5174645, 2167694, 1343714 and 564800, i.e., 8.0%, 9.0%, 10.3%, and 12.2% higher than the previous year due to rising per capita income of the individuals which further led to the massive demand for cetane improver additives in APAC region. Moreover, the implementation of the China V and China VI standards and Bharat stage VI standards for diesel has been a major growth driver In the Asia Pacific region. The increasing automotive production in various countries of APAC will lead to increased demand for cetane improver additives, which will further propel the cetane improver additives market in Asia Pacific during the forecast period.
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Cetane Improver Additives Market Growth Drivers:
- Increasing number of diesels based commercial and passenger vehicles
The automotive industry is the major end-user industry for cetane improver additives. As diesel-based engines provide enhanced performance, consumers prefer diesel over petrol engines. In APAC, the demand for commercial vehicles is increasing due to the improved economic conditions in major markets. According to the International Energy Agency (IEA) more than 1 billion passenger cars are expected to be on-road by 2035 globally which will also have an impact on the cetane improver additives market. According to IEA, China and India market is expected to grow at a faster pace that is $420million and $160 million respectively whereas the other markets such as Europe and the U.S. will grow at an average speed approximately $290 million and $280 million respectively by 2035. According to IEA, it is projected that there will be an increase of 68% in passenger cars between2011 to 2040 in developing countries of Asia. China's passenger car volume market is estimated to rise by more than $470 million over the period of 2011-2040 and the economic growth of china shifted inward, freight movements which will lead to a rise in transportation and also raise diesel demand in the market. Therefore, it is expected that the cetane improver additives market will also grow at the same pace as the demand for diesel fuel in developing countries will increase in the near future.
- Stringent emission control regulations on diesel fuels have led to regulating/fixing specified cetane number
Engines operating on low Cetane number (CN) diesel fuel prolongs ignition, are noisy, emit smoke and hydrocarbon pollutants, and consume more fuel than required. Due to environmental pollution, country-specific standards for having a minimum cetane number are framed. Hence, cetane number improver is being added to increase the cetane value of diesel for efficient use and also help in the reduction of gases such as NOx (notably from heavy-duty engines), Carbon Oxide, particulate matter, and acetaldehyde emissions (notably from light-duty engines). According to a study by The National Renewable Energy Laboratory (NREL), 2-EHN when added in biodiesel blend B-20 reduces the NOx by 4%. In Europe, over the years the minimum cetane number increased to 51 in 2017. In the U.S. minimum Cetane Number requirement was 40 and as per the current regulations, it is 45 for the diesel engines in order to reduce emissions further. Countries in APAC such as China, India, Japan, and Singapore have minimum Cetane Number requirements as 49, 51, 45, and 51 respectively. Hence, to meet the government standards cetane improver additives are being added to diesel. Thus, stringent emission control regulations on diesel fuels acts as a driver for the cetane improver additives market.
Research and development have become a major driving force in the biodiesel industries by improving the technology of processing and production of biodiesel from individual feedstock and additives. The growth in the global biodiesel industry can be attributed to the enterprising implementation of biofuel policies in various nations such as the US, Argentina, Brazil, and Indonesia. For instance, the U.S. Renewable Fuel Standard (RFS) requires increased volumes of renewable fuels each year. The regulations regarding the formulation of fuel in these regions are expected to increase the share of biodiesel, thereby increasing the demand. According to the US National Biodiesel Board, 2.1 billion gallons of biodiesel were used by 3.8 million US consumers in 2015 which led to a reduction of carbon emissions by approximately 18 million metric tons. The development of the biodiesel industry in many countries is expected to further increase in the coming years owning to their goal to mitigate climate change. As cetane improvers need to be added in biodiesel for better ignition. The growth in the biodiesel industry is expected to create various opportunities for the research and development of Cetane Improver Additives in the coming future.
The Major Players in this Market Include
The major companies in the cetane improver additives market include 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). The key focus of the companies has shifted towards expansion and acquisition. In January 2020, to support the Chinese transportation industry with cutting edge technology and traditional capacity, Infineum, 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. In July 2018, Eurenco formed a new subsidiary, Very One, which is solely involved in production, development and sales of fuel additives. In July 2017, Afton Chemical acquired Mexicanos, S.A. de C.V. (AMSA), a petroleum additive manufacturing, sales and distribution company based in Mexico.
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