Specialty Fuel Additives Market Report

Though the automotive industry has seen its ups and downs, several aspects of manufacturing procedures as well as consumer demands have changed dramatically in recent years. As more people become aware of the negative consequences that hazardous fuel deposits on engines have on overall vehicle performance, manufacturers are striving harder to raise the quality of fuels, especially those used in the automotive industry. Specialty fuel additives that help unclog blocked injectors, reduce dual deposits in engine injector nozzles, eliminate knocking, and provide other parameters of fuel safety and quality are projected to remain in high demand across the automotive industry. The increased usage of fuel additives in the automotive industry is likely to boost the global specialty fuel additives market growth.

However, these additives are mostly used in aviation, diesel, and gasoline fuels. Diesel is a more environmentally harmful fuel, which necessitates the use of specific fuel additives to improve a vehicle's fuel efficiency. The diesel category is expected to account for the majority of the market. Developing countries such as India, Indonesia, Thailand, and China are important drivers of the diesel market. Increased usage of ULSD in North America and Europe, which needs a significant number of fuel additives, is likely to increase demand for speciality gasoline additives in the coming years. Rising gasoline consumption in the United States and China is likely to be a primary driving force for speciality fuel additives in gasoline applications.

The rising demand for alternative fuels is a key hurdle for the industry, and it is projected to stifle growth in the global specialty fuel additive market throughout the forecast period. Furthermore, significant investments in research and development activities may hinder market expansion. The move towards electric cars in industrialised and most emerging nations will most likely pose a challenge to existing IC engine vehicles and hence fuel supplements. Raw material price fluctuations will affect the market's growth rate. In addition, stringent regulations and environmental standards imposed by government bodies increase operational costs and complexity for manufacturers, impacting market expansion.

Additionally, a lack of consumer and business awareness regarding the benefits and proper applications of these additives hinders market uptake, necessitating comprehensive educational efforts. Compatibility issues with different fuel types and engine technologies may limit the adoption of certain additives. Moreover, the market’s dependence on the oil and gas sector means fluctuations in oil prices and industry health can significantly influence demand. Furthermore, ensuring consistent product quality and performance, particularly during scaling, poses significant challenges and risks related to recalls or reduced market acceptance.

During February 2024, Calumet Specialty Products Partners, L.P. announced a rebranding as Calumet Inc., a Delaware corporation also referred to as "New Calumet." This action comes after Calumet GP LLC and The Heritage Group's involvement in the Partnership Restructuring Agreement in November 2023. The Conversion Agreement brought profound changes from a Master Limited Partnership (MLP) to a C-corp structure. These conversions are expected to make it easier for the market to access Calumet and for investors to be included in its ownership stake. It is anticipated that by mid-2024 Calumet will have transitioned into new corporation with registration statement on Form S-4 as an important milestone in her strategic evolution.

In December 2023, NewMarket Corporation, a leader in specialty chemicals, signed an agreement to acquire AMPAC Intermediate Holdings, the parent company of American Pacific Corporation (AMPAC). Located in Cedar City, Utah, AMPAC is well-known for its crucial performance enhancers for solid rocket motors and Halotron BrX, an environmentally friendly fire suppressant. With over 60 years of expertise, AMPAC's integration will enhance NewMarket's footprint in defense and space sectors. The deal, set to finalize in early 2024, aligns with NewMarket’s strategic goals in global safety and innovation.

According to EIA, consumption of both renewable diesel and biodiesel on the West Coast peaked at 152,000 b/d (barrels per day) in December 2023, and in January 2024, it was close to this record at 141,000 b/d. The majority of agriculture and construction equipment in the country runs on diesel fuel. Diesel fuel is used in tanks and vehicles by the military because it is less flammable and explosive than other fuels. Diesel fuel is also utilized in diesel engine generators to generate electricity, since diesel generators are the primary source of electricity in the majority of Alaska's remote villages. The second-largest market for automobile manufacturing and sales globally is the United States. The United States has the world's largest aerospace industry. The overall active general aviation fleet is expected to increase 211,575 aircraft by 2039, according to the Federal Aviation Administration (FAA). This is anticipated to boost the use of jet fuel in the country. All of the above-mentioned factors have an impact on the usage of fuel additives throughout the forecast period.