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The Transformer Oil Market size is estimated to grow by USD 1.13 billion at a Compound annual growth rate (CAGR) of 8.09% between 2023 and 2028. The market for transformer oils is propelled by the expansion of transmission and distribution networks, mandating their usage. Furthermore, the modernization of existing transformers amplifies this demand. The increasing adoption of renewable energy, such as solar and wind energy, also fuels market growth, as transformers within these systems necessitate specialized oils for optimal performance. As the energy landscape evolves towards sustainability, the demand for transformer oils continues to surge, driven by the imperative for efficient operation in diverse power transmission and distribution setups. This trend underscores the pivotal role of transformer oils in ensuring the reliability and performance of electrical infrastructure amidst the transition towards cleaner and more sustainable energy solutions.
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The market is integral to the power sector, providing essential dielectric insulating fluid for electric grids worldwide. As the industry evolves, there's a notable shift towards bio-based products, driven by government bodies' emphasis on sustainability. Mineral-based products remain prominent, with key players like Iraq, Venezuela, Iran, Libya, and Nigeria contributing significantly. Despite challenges posed by the COVID-19 pandemic, transformer oil demand persists. Base oils are crucial components for capacitors, circuit breakers, and switchgear in various applications, including boilers and manufacturing facilities. With a focus on efficiency and reliability, wax-free naphthenic mineral oil dominates the 100 MVA to 500 MVA segment. From refineries to power plants, transformer oils play a vital role across industries, including food processing, steel, and automotive sectors. As renewable energy resources expand, transformer oils adapt to meet the demands of evolving technologies like UHV DC transmission lines and high-performance computing (HPC). Our researchers studied the market research and growth data for years, with 2023 as the base year along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The surge in the market's growth is propelled by the increasing installation of new transformers and the replacement of aging ones. As the current power networks struggle to meet escalating demand, there's a pressing need for widespread T&D infrastructure upgrades globally. For instance, data from the US Department of Energy indicates that over 70% of the country's grid transmission lines and power transformers exceed 25 years in service. Concurrently, smart grids are gaining traction worldwide. Consequently, there is a heightened demand for transformer oil to accommodate the expanding grid and modernized infrastructure. These dynamics are poised to significantly influence market growth throughout the forecast period.
Due to growing environmental concerns by consumers, several transformer manufacturers have started designing and manufacturing environment-friendly products. There is an increasing demand for transformers that involve minimal environmental hazards and, at the same time, offer improved life cycle costs, minimal maintenance requirements, and enhanced service life.
For instance, manufacturers such as General Electric have been focusing on the production of green transformers that are energy-efficient, market-efficient, grid-reliable, and environment-friendly to meet the growing demand. One of the key innovative eco-friendly transformer offerings for environment-friendly consumers is the green transformer. The main feature of these transformers is the advanced online monitoring systems to improve operational management which prevent the occurrence of faults and damages. Thus the emergence of such eco-efficient transformers can drive the market trends during the forecast period.
The demand for mineral oils such as naphthenic and paraffinic oils, which are used in transformer oil in end-user industries, are adversely affected by fluctuations in crude oil prices. For instance, as per the IEA, the average cost of crude oil was USD 73.6 bbl in October 2018. However, in H1 2022, the average cost of crude oil was more than USD 100/bbl. The unexpected price fluctuations and the recent frequent volatility in crude oil prices have severely affected the petroleum industry. Thus, such factors can significantly hinder the growth of the market during the forecast period.
The industrial segment will account for a major share of the market's growth during the forecast period. There is increasing adoption of transformer oil in industries to capitalize on the reliability benefits. The main reason for this deployment of transformer oil in the industrial sector is to ensure a continuous and stable power supply without any voltage fluctuations, reducing the risk of downtime.
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The industrial segment was valued at USD 651.8 million in 2017 and continued to grow until 2021. As the need for transformers in the industrial segment arises mostly when supplies from power utilities fail to meet power requirements, there is a relatively low demand for transformers from the industrial segment when compared to the power utilities segment. Furthermore, as large industrial end-users require variable power, which is met by their own transformers, such transformers are more common in industries such as oil and gas, chemical and petrochemical, and water and wastewater, which require large amounts of power for multiple processes. Also, factors such as increasing solar and wind power use in the industrial sector will create more demand for transformers. Thus such factors can significantly drive the growth of the industrial segment during the forecast period.
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APAC is estimated to contribute 55% to the growth during the forecast year. Technavio's analysts have provided extensive insight into the market forecasting, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. Due to the rising urban population and the growing significance of the industrial sector (such as the growth of the manufacturing sector in India), countries like China, India, Vietnam, Thailand, and the Philippines have been exhibiting increased demand for electric power every year. As a result, there is increased installation and expansion of T and D equipment, such as power and distribution transformers, within the existing grid to expand the network. China is heavily investing in expanding its T and D network. For instance, State Grid, the Chinese largest utility, is expected to begin the construction of USD 22 billion of new long-distance, ultra-high-voltage transmission lines. Moreover, power generation capacity is expected to increase substantially by the end of 2023, which will increase the demand for transformer oil in the country. Hence, such factors will significantly drive the market in the region during the forecast period.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Calumet Specialty Products Partners L.P: The company offers transformer oils such as Caltran.
We also have detailed analyses of the market’s competitive landscape and offer information on key companies, including: Apar Industries Ltd., BP Plc, Calumet Specialty Products Partners L.P., Cargill Inc., Chevron Corp., Dow Chemical Co., Edens Garden, Ergon Inc., Exxon Mobil Corp., Hinduja Group Ltd., Lubrita Europe BV, Neste Corp., Nynas AB, PETRONAS Chemicals Group Berhad, Phillips 66, Repsol SA, Savita Oil Technologies Ltd., Shell plc, Sinopec Shanghai Petrochemical Co. Ltd., and TotalEnergies SE
Technavio market forecast the an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies companies into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Companies are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
The market plays a pivotal role in various sectors, including automotive industries and power generation facilities, ensuring the efficient operation of three-phase distribution transformers. Naphthenic and paraffinic crude oils serve as essential base oils, offering excellent dielectric strength to withstand excess heat and thermal stress. In modern applications like electric vehicles and credit card fraud detection systems, transformer oils are crucial for maintaining stability and dielectric properties. Moreover, advancements in dry-type transformers and HVDC transmission systems drive the demand for specialized ester liquids and silicon oils. As renewable energy sources like wind, biomass, and hydroelectric power expand, transformer oils adapt to support bulk power transmission capabilities, enhancing stability and transmission capacity in electrical power systems across remote locations and densely populated centers while minimizing transmission losses.
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Market Scope |
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Report Coverage |
Details |
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Base year |
2023 |
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Historic period |
2018 - 2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 8.09% |
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Market Growth 2024-2028 |
USD 1.13 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
7.32 |
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Regional analysis |
APAC, North America, Europe, South America, and Middle East and Africa |
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Performing market contribution |
APAC at 55% |
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Key countries |
China, US, India, Japan, and Canada |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Apar Industries Ltd., BP Plc, Calumet Specialty Products Partners L.P., Cargill Inc., Chevron Corp., Dow Chemical Co., Edens Garden, Ergon Inc., Exxon Mobil Corp., Hinduja Group Ltd., Lubrita Europe BV, Neste Corp., Nynas AB, PETRONAS Chemicals Group Berhad, Phillips 66, Repsol SA, Savita Oil Technologies Ltd., Shell plc, Sinopec Shanghai Petrochemical Co. Ltd., and TotalEnergies SE |
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Market dynamics |
Parent market growth analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Product
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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