US demand for specialty fuel additives will grow 4.8 percent per year to $1.6 billion in 2016, with volume demand increasing 1.1 percent annually to 725 million pounds. Advances will be driven by a mild rebound in petroleum fuel demand as the economic recovery continues to strengthen and by an increase in additization rates due to rising biofuel consumption as mandated by the federal government. Additionally, market growth will reflect continued price inflation due to upward pressure on raw material costs as natural gas prices rebound from their 2012 lows. These and other trends, including market share and product segmentation, are presented in Specialty Fuel Additives, a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.
Cold flow improvers will grow at the fastest rate through 2016 due to the increasing use of biodiesel in the fuel supply, a requirement of the EPA’s Renewable Fuel Standard 2 (RFS2). Biodiesel’s reduced functionality in diesel engines in winter conditions requires higher loadings of cold flow improvers, which will help drive demand. However, biodiesel’s high cetane number and excellent lubricating properties will also contribute to a reduction in the use of lubricity improvers and cetane improvers, making them the only additives to experience a decline in volume demand through 2016. Dyes and markers and metal deactivators will also not benefit from growing fuel demand, with volume demand for both products remaining flat through 2016. Dyes and markers will be mildly impacted by an end to EPA-mandated dyeing of high sulfur fuels, while metal deactivator loadings will decrease slightly due to the use of more metal-free additives in fuel. Demand for antioxidants, corrosion inhibitors, and other additives will all expand at a moderate pace, due to increasing fuel demand.
Deposit control agents will remain the largest product segment. A previous attempt by the EPA to regulate detergent levels in gasoline actually resulted in a decrease in demand, causing deposit-related engine problems. This prompted several automakers to establish the Top Tier Detergent Gasoline standard in 2004. Deposit control demand rebounded quickly as most major gasoline brands adopted the Top Tier standard. Future growth in this segment will be aided by recent retailer efforts to differentiate their products by promoting the high concentrations of detergents in their gasoline.
The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.