Fuel Additives Industry

Market Size
USD 6.1 Billion in 2015

Annual Growth Rate
6.9% CAGR between 2015-2020

Market Structure
Organized, Oligopolistic with 90% of the market captive amongst fuel manufacturers

Industry Median EV/EBITDA
8.2x (ttm)

Fuel Additives Industry
 
Fuel Additives Industry
Fuel additives are fuel-soluble chemicals added in small quantities to enhance the properties of the fuel, improve fuel handling and fuel performance.
The rapidly increasing demand for hydrocarbon fuels from transportation and power industries have led to the development of a large range of fuel additives to meet industry requirements.
Typically, additives are derived from petroleum based raw materials and their chemistry and function are highly specialized. Fuel additives are used in varying proportions in gasoline, diesel and aviation fuels to help improve properties such as fluidity, stability, lubricity, volatility, non-corrosivity and cleanliness. They help in driving up efficiency, reducing mechanical wear and tear and reduce maintenance costs.
The global fuel additives market was valued at USD 6.1 Billion in 2015 and is estimated to register a CAGR of 6.9% between 2015 and 2020 to reach USD 8.6 Billion 2020[1]. Around 90% of this market is captive amongst fuel manufacturers.
Aftermarket fuel additives market is poised to expand at a CAGR of 7.2% from USD 630 Million in 2016 to USD 1,170 Million in 2025[2]
 
Facts
  • The market is closely held and oligopolistic with most manufacturers having a strong captive market
  • Closely aligned with the fuel industry with all major players being directly or indirectly owned by oil and gas giants
  • Large capital investment required restricting the entry of new players
  • North America remains the largest regional market primarily due to the awareness about the benefits of fuel additives
  • The largest 3 players are Afton Chemical Corporation, Innospec and Lubrizol Corporation who together hold 28.5% of the market share (as of 2014)
  •  
Segmentation of Petroleum Additives Market
 
Petroleum Additives
 
 
 
Fuel Additives
Fuel additives are chemical components that help oil refiners meet fuel specifications or formulate packages that improve the performance of gasoline, diesel, biofuels and other fuels resulting in lower operating costs, improved vehicle performance and reduced tailpipe or smokestack emissions
Lubricant Additives
Lubricant additives are highly formulated chemical solutions that when blended with base fluids, improve the efficiency, durability, performance and functionality of mineral oils, synthetic oils and biodegradable fluids thereby enhancing the performance of machinery and engines
 
 
Gasoline Performance Additives
Gasoline performance additives clean and maintain key elements of the fuel delivery systems, including fuel injectors and intake valves in gasoline engines
Detergents
Detergents clean moving parts of engines and machines suspend oil contaminants and combustion by-products, and absorb acidic combustion products
Diesel Fuel Performance Additives
Diesel fuel performance additives perform similar cleaning functions in diesel engines
Dispersant
Dispersants serve to inhibit the formation of sludge and particulates
Cetane Improvers
Cetane improvers increase the cetane number (ignition quality) in diesel fuel by reducing the delay between injection and ignition
Extreme Pressure/Anti-wear Agents
Extreme pressure/anti-wear agents reduce wear on moving engine and machinery parts
Stabilizers
Stabilizers reduce or eliminate oxidation in fuel
Viscosity Index Modifiers
Viscosity index modifiers improve the viscosity and temperature characteristics of lubricants and help the lubricant flow evenly to all parts of an engine or machine
Corrosion Inhibitors
Corrosion inhibitors minimize the corrosive effects of combustion by-products and prevent rust
Antioxidants
Antioxidants prevent oil from degrading over time
Lubricity Additives
Lubricity additives restore lubricating properties lost in the refining process
Engine Oil Additives
Engine oil additives help lower emissions, extend engine life and improve fuel economy
Cold Flow Improvers
Cold flow improvers improve the pumping and flow of distillate and diesel fuels in cold temperatures
Driveline Additives
Driveline additives help ensure equipment runs better and lasts longer
Octane Enhancers
Octane enhancers increase octane ratings and decrease emissions
Industrial Additives
Industrial lubricant additives create improved efficiencies and help protect hydraulic systems, industrial gears, bearings, turbines, metalworking tools and parts
 
 
By Application
Diesel
Gasoline
Aviation
By Type
Deposit Control Additives
Cetane Improvers
Antioxidants
Dyes & Markers
Lubricity Improvers
Cold flow Improvers
Stability Improvers
Corrosion Inhibitors
Octane Improvers
Anti-icing
 
Key Players
 
Company Name
Primary Services
Afton Chemical Corporation (US)
Petroleum Additives
Innospec (US)
Speciality Chemicals
The Lubrizol Corporation (US)
Speciality Chemicals
BASF SE (Germany)
Chemicals, Plastics, Oil & Gas
Chevron Ornite Company LLC (US)
Petroleum, Natural Gas and Other Petrochemicals
Chemtura Corporation (US)
Speciality Chemicals
Total S.A. (France)
Oil & Gas Exploration, Refining, Commodity Chemicals
Eni S.p.A. (Italy)
Oil & Gas, Petroleum Additives
Evonik Industries AG (Germany)
Speciality Chemicals
Infineum International Limited (UK) - joint venture between the additive product lines of ExxonMobil Chemical Company and Royal Dutch Shell Chemicals
Petroleum Additives
Lucas Oil Products, Inc. (US)
Automotive Oils, Additives and Lubricants
Tianhe Chemicals (China)
Speciality Chemicals
Dorf Ketal Chemicals India Pvt. Ltd.
Speciality Chemicals, Additives
Fuel Performance Solutions Inc.
Process Chemicals, Additives
 
Private Equity and M&A Activity
 
Year
Acquirer
Target
Target/Transaction – Note
Type
2018
SK Capital
SI Group
SK Capital has announced an agreement to acquire SI Group, a leading global developer and manufacturer of performance additives and intermediates
PE[3]
2018
SK Capital
Israel Chemicals Ltd. (ICL) - Fire Safety and Oil Additives Business
ICL is a global manufacturer of specialty mineral based products for agriculture, food and engineered materials markets. Post transaction the entity was renamed to Perimeter Solutions
PE[4]
2017
Lanxess
Chemtura
Chemtura was one of the world’s leading suppliers of flame retardant and lubricant additives
M&A[5]
2017
Evonik Industries AG
Air Products, Inc. – Speciality Additves Business
Air Products and Chemicals, Inc. is an American international corporation whose principal business is selling gases and chemicals for industrial uses
M&A[6]
2016
Dorf Ketal Chemicals
Flowchem LLC Technologies
US-based specialty oilfield chemical provider
M&A[7]
2016
Dorf Ketal Chemicals
Filtra Catalysts & Chemicals Ltd
Thane-headquartered manufacturer of catalysts and specialty process chemical used in the refineries and for petrochemical markets
M&A[8]
2015
Evonik Industries AG
Monarch Catalyst
Thane-headquartered manufacturer of catalysts and specialty process chemical used in the refineries and for petrochemical markets
M&A[9]
2015
Kraton Performance Polymers
Arizona Chemical
Manufacturer of bio-refined products for the adhesives, roads & construction, tires, lubricants, fuel additives, mining and oleochemicals markets
M&A[10]
2013
SK Capital
Chemtura Corporation - Antioxidant and UV Stabilizer Solutions Business
Leading global supplier of a comprehensive portfolio of additives including antioxidants, antiozonants, inhibitors, polymer modifiers and UV stabilizers
2011
Berkshire Hathaway
Lubrizol Corporation
Provider of specialty chemicals for the transportation, industrial and consumer markets
M&A[12]
2011
Ecolab
Nalco
World’s leading water treatment and process improvement company
M&A[13]
2011
Brenntag
Multisol Group Limited
Market leader in the formulation, blending and distribution of high value fuel and lubricant additives, base oils and speciality chemicals
M&A[14]
2010
Dorf Ketal Chemicals
DuPont Chemicals and Fluoro Products - Speciality Catalysts Business
DuPont is one of the world leaders in the business of organic titanates and operates in more than 70 countries
M&A[15]
2009
Dorf Ketal Chemicals
Intec Polymers
Intec is one of the world leaders in the business of Organic Titanates, Poly Vinyl Formal and Poly Isocyanates
M&A[16]
2007
Dorf Ketal Chemicals
ExxonMobil Chemical - Component Additives Business
ExxonMobil Chemical is one of the largest worldwide petrochemical companies
M&A[17]
 
Listed Players
 
Company Name
Exchange
EV (in USD billion)
EV/EBITDA
Chevron Oronite
NYSE[18]
251.6
9.6x
Innospec (US)
NASDAQ[19]
2.0
11.5x
BASF SE (Germany)
FWB[20]
98.86
7x
NewMarket Corporation (Parent firm of Afton Chemical Corporation (US)
NYSE[21]
5.18
13.8x
Lanxess
FWB[22]
11.38
6.3x
Total S.A. (France)
Euronext, NYSE[23]
184.19
6.3x
Eni S.p.A. (Italy)
BIY, NYSE[24]
77.55
4.8x
Evonik Industries AG (Germany)
FWB[25]
21.18
6.9x
Royal Dutch Shell Chemicals (RDS-A)
LSE, Euronext, NYSE[26]
328.17
6.5x
ExxonMobil Chemical Company
NYSE[27]
384.75
10.4x
Fuel Performance Solutions Inc.
OTC[28]
4.81
NA*
Ecolab
NYSE[29]
51.53
17x
Clariant
SIX, FWB[30]
10.22
9.4x
Median
 
 
8.2x
*NA – Not Available
 
Growth Drivers
 
The major drivers of the fuel additives are growing fuel demand, growing awareness among users regarding the benefits of fuel additives, demand of high fuel efficiency and stringent regulations and emission standards adopted by various countries
  • Growing demand for low emission and efficient energy sources from the manufacturing, aviation and automobiles sector coupled with the increasing use of low sulphur content fuels will boost the growth of newer emissions control technologies including the addition of fuel additives which would substantially lower emissions of particulate matter from engines.
  • With increasing demand for Ultra-Low Sulphur Diesel (ULSD) across the globe, the fuel additives market is also witnessing high growth as ULSD requires higher quantities of fuel additives to be blended in. The worldwide increase in the number of vehicles has resulted in the demand for efficient fuels which meet the government regulations for fuel emissions which is projected to drive the market for fuel additives.
  •  
  • The demand for fuel additives in Asia-Pacific is expected to rise at the back drop of high performance fuels for automobiles. The performance and life of an engine can be improved by using fuel additives. Automobile sales in Asia-Pacific region are rapidly increasing resulting in demand for efficient and high performance of vehicles. This will drive the demand for fuel additives in the region.
  •  
  • The space is also witnessing consolidation with industry players opting for partnerships and strategic alliances. There is also a strong focus on developing of new fuel additive products to meet the constantly changing demands of customers.
 
Notes
Exchange Rate: 1 USD = 65 INR = 0.75 GBP = 0.85 Euro
Disclaimer: This information has been collected through secondary research and SMERGERS is not responsible for any errors in the same
 
References
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  2. https://www.transparencymarketresearch.com/pressrelease/aftermarket-fuel-additives-market.htm
  3. https://skcapitalpartners.com/sk-capital-announces-agreement-to-acquire-si-group/
  4. https://skcapitalpartners.com/sk-capital-announces-agreement-to-acquire-fire-safety-and-oil-additives-businesses-from-israel-chemicals-ltd/
  5. https://lanxess.com/en/corporate/media/press-releases/2017-00035e/
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  10. https://www.prnewswire.com/news-releases/kraton-polymers-llc-announces-closing-of-its-acquisition-of-arizona-chemical-holdings-corporation-300200596.html
  11. https://www.addivant.com/addivant-transaction-completed-%E2%80%93-new-ownership-name-and-expansion-plans-announced
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  13. https://investor.ecolab.com/news-and-events/press-releases/2011/20-07-2011a
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