Frost: Environmental Legislation Drives Auto, Marine Performance Fuel Additives Markets
October 2, 2006 // Published as a news service by IHS
Recent analysis from Frost & Sullivan found that the EMEA automotive and marine performance fuel additives markets earned revenues of €446.0 million in 2005, with estimates to reach €590.0 million in 2012.
"Since 1996, the implementation of environmental legislations has imposed stringent control over sulphur emissions, thereby contributing to accelerated market growth," said Frost & Sullivan industry analyst Robert Outram.
"While 500 ppm (parts per million) was permitted in 1996 in accordance with Directive 94/12/EC (Euro I legislation), this was reduced to 350 ppm in 2000 (Euro III) and subsequently to 50 ppm in 2005 (Euro IV) under Directive 98/69/EC. In the future, implementation of the specifications of Directive 2003/17/EC (Euro V) will result in an additional reduction in the emission permissible limit."
Analysts said adhering to emerging environmental legislations will result in greater adoption of fuel additives by vehicle original equipment manufacturers (OEMs) and fuel producers to meet new standards. As reduced sulphur levels require more lubricants and conductivity improvers, demand for fuel additives will gain further momentum. Because of limited crude oil availability, fuel producers will exhibit greater dependence on the use of additives in low-grade fuel in order to fulfill necessary fuel specifications and meet growing customer demand.
Besides emission restrictions, analysts said the diesel fuel segment should experience continued growth as diesel fuel offers improved fuel economy in comparison to gasoline-powered vehicles. Meanwhile, various additives such as octane improvers, antioxidants additives, anticorrosion additives, deposit control additives and others, are also being used in gasoline to offer enhanced fuel performance. Within the bunker fuel additives segment, the enforcement of a specified regional limit in the Baltic Sea Sulphur Emission Control Area (SECA) is expected to result in the increased use of lubricants and conductivity improvers/static dissipators.
Given the maturity of the market, the gasoline additives segment is unlikely to demonstrate significant growth. However, analysts said diesel additives and other niche markets such as biofuels and premium fuels additives, which constitute a small percentage of the transport fuel additives market, will continue to exhibit developments.
"However, due to slow market growth, several classes of additives are becoming commoditized, thereby losing their importance as specialty chemicals," said Outram. "Further, the developing trend of additives and precursors for synthesis being traded or auctioned over the Internet is anticipated to adversely affect revenues."
To prevent this decline in revenues, market participants should implement novel product launches and create new ranges of additives that are compatible with the latest vehicle technological developments. Analysts said due to intensifying competition and the emergence of large global participants, additive manufacturers and formulators should ensure a global presence and an extensive portfolio of additive products to remain competitive.
Source: Frost & Sullivan.