Re-refined base oils are just as good as new material, says study

21 September 2010 22:39  [Source: ICIS news]

HOUSTON (ICIS)--Re-refined base oils are just as good as new material as a result of technological advances, a consulting and research firm said on Tuesday.

However, the products still face significant market hurdles.

About 69% of finished lubricants are converted into used oil globally, according to a study by Kline & Company. Of the total used oil collected, only 16% is re-refined and the rest is used as industrial fuel, according to the study.

“Following significant technological advances in the last 10 years, the re-refining industry has reached a stage where it can produce re-refined base stocks on par with virgin base stocks,” the company said.

“Awareness of the quality of re-refined lubricants is spreading among a growing band of end users; however, this perception is not nearly universal and customer hesitance due to perceptions of poor quality and inconsistent supply still prevents a larger-scale industry growth,” it continued.

End users who have no experience with re-refined base stocks equate them with poor quality, sub-standard, and adulterated products, according to Kline.

End-users “also tend to club all re-refining technologies and re-refined base stocks into one category”, Kline continued. “This hurts re-refiners who use advanced technologies to produce high quality base stocks."

Companies with advanced re-refining technologies “need to set themselves apart from other re-refiners,” said Milind Phadke, industry manager at Kline’s Energy practice. “This issue is particularly important in Asia, Africa, and in other low-cost markets where re-refined base stocks are equated with sub-standard, adulterated, and spurious products.”

Lopsided regional development of re-refining imposes another hurdle, according the Kline.

While re-refining has a significant presence in Europe and a growing presence in North America, it is practically non-existent in other parts of the world, according to the market research firm.

“As the re-refining capacity in Europe has grown, the competition for the purchase of used oils and sales of re-refined base stocks has increased, much to the detriment of the industry,” Kline said.

“Also, to be able to market to global lubricant marketers, re-refined base stocks need to be available in a few standard specifications in all parts of the world. At present, this is not the case.”

Despite the hurdles, rising virgin base oil prices, improvements in re-refining technology and favourable regulations in Europe and increasingly in North America provide three drivers for growth in the re-refining industry, the study said.

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By: Brian Ford
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