The global decant oil market share is estimated to grow at a moderate rate during the forecast period (2023–2031). The global decant oil market is witnessing strong growth propelled by a growing demand for carbon black from the rubber industry, as decant oil is used in producing carbon black. Moreover, decant oil is utilized to produce needle coke, a primary raw material in manufacturing electric arc furnaces (EAF), which is widely used in steelmaking. This is anticipated to drive further the global decant oil market.
Decant oil, often called slurry oil or cat bottoms, is a type of process oil with a high boiling point obtained from the fluid catalytic cracking (FCC) or residual catalytic cracking (RCC) units in refineries. It has a comparable boiling range to heavy fuel oil, although it exhibits significantly more density. Certain plants have a higher slurry generation compared to water.
Decant oil exhibits a dense and oily visual appearance, emits a distinct petroleum asphalt smell, and contains significant amounts of polycyclic aromatic hydrocarbons (PAHs), asphaltenes, naphthalene, hydrogen sulfide, and sulfur. Decant oil is predominantly utilized as a raw material for producing carbon black, needle coke, and heavy fuel oil. Additionally, it can be incorporated into coker feed, diesel, and residual fuel oil.
The increasing need for carbon black in the rubber industry, particularly for tire production, is a significant factor driving the decant oil market. Carbon black is a dark powder or granular material formed from hydrocarbons' incomplete combustion or thermal breakdown, such as decant oil. Carbon black is a reinforcing agent, filler, pigment, and UV stabilizer in rubber products, augmenting their strength, longevity, resistance to wear, and coloration.
The International Rubber Study Group's analysis indicates that global consumption of natural rubber and synthetic rubber in 2021 amounted to 13.77 million metric tons and 15.81 million metric tons, respectively. The projected growth rates for rubber consumption in 2023 are 2.8% and 2.9% for both types of rubber, respectively. Moreover, the overall demand for rubber is anticipated to increase by an average of 2.4% each year until 2031. The automotive industry's rebound following the COVID-19 epidemic is the primary catalyst for this rise. As a result, the rubber industry is anticipated to experience increased carbon black and decant oil consumption.
The steel industry has experienced increased demand for needle coke, particularly for electric arc furnace (EAF) steelmaking. Needle coke is a high-quality petroleum coke characterized by its needle-shaped crystal structure and low thermal expansion coefficient. Needle coke is used to produce graphite electrodes, crucial elements in the electric arc furnace (EAF) steelmaking process. Graphite electrodes produce an electrical discharge that liquefies scrap metal and other unprocessed substances, transforming them into molten steel.
Based on a reputable source, global steel output increased tenfold over seventy years, starting in 1950. It has risen from 189 million metric tons to an astonishing 1,885 million metric tons by 2022. The surge in demand for steel is mostly attributed to the tremendous growth in urbanization. The share of EAF steelmaking rose from 27.9% in 2019 to 29.3% in 2020, indicating a transition towards steel manufacturing technologies that are more energy-efficient and environmentally sustainable. Thus, there is an anticipation of a rise in the need for needle coke and decant oil within the steel sector.
A significant limitation of the decant oil market is the strict environmental laws regarding the sulfur level of marine fuels. Decant oil can be mixed with heavy fuel oil and utilized as bunker fuel for naval engines. However, the International Maritime Organization (IMO) has enforced a regulation that imposes a maximum sulfur content of 0.5% in marine fuels from January 1, 2020, as opposed to the previous limit of 3.5%. This regulation aims to mitigate the release of sulfur oxides (SOx), which harm human health and the environment.
Decantant oil, with a sulfur content ranging from 1.5% to 2.5% by weight, does not comply with IMO regulations. As a result, it experiences reduced demand from the marine industry. In addition to encouraging the use of alternative fuels like hydrogen, biofuels, and liquefied natural gas (LNG), the IMO rule has put the conventional oil industry under pressure.
The use of decant oil as a raw material for hydrogen generation is generating opportunities for the expansion of the global market. Hydrogen is an environmentally friendly and sustainable energy source with versatile applications, including fuel cells, power production, transportation, and industrial activities. Decant oil can undergo conversion into hydrogen using different techniques, including steam reforming, partial oxidation, and gasification.
Decant oil can be combined with additional feedstocks, such as natural gas, coal, and biomass, to enhance hydrogen production and decrease carbon emissions. IEA reports that the demand for hydrogen in 2021 reached 94 million tonnes (Mt), surpassing the levels before the epidemic (91 Mt in 2019). This amount of hydrogen contains energy equivalent to approximately 2.5% of the world's final energy consumption.
Moreover, as stated in a report by McKinsey & Company, the worldwide demand for hydrogen is projected to rise to 600 to 660 million tonnes by 2050, resulting in a reduction of over 20 percent in global emissions. The increase in demand for decarbonization in the energy industry and the advent of new hydrogen uses are the main factors driving this expansion.
| Study Period | 2020- | CAGR | % |
| Historical Period | 2020-2022 | Forecast Period | - |
| Base Year | 2023 | Base Year Market Size | |
| Forecast Year | Forecast Year Market Size | ||
| Largest Market | Asia-Pacific | Fastest Growing Market | North America |
Based on region, the global decant oil market is bifurcated into North America, Europe, Asia Pacific, Latin America, and the Middle East and Africa.
Asia-Pacific is the most significant global decant oil market shareholder and is expected to expand substantially over the forecast period. The Asia-Pacific decant oil market is experiencing rapid growth due to the increasing urbanization and industrialization in the region. The robust demand for needle coke in the steel industry is the primary driver of the decant oil market in the Asia-Pacific region. The global production capacity for needle coke in 2011 was approximately 1200kt/a, with China accounting for 250kt/a. China had just four enterprises involved in needle coke production. According to Xinyu Information's statistics, the global production capacity of needle coke will reach approximately 3250kt/a by 2021. China's needle coke production capacity is about 2240kt/a, which accounts for 68.9% of the global production capacity. Moreover, the number of Chinese needle coke production enterprises has increased to 21. The rise in needle coke production in this region can be ascribed to the surging demand from the thriving steel sector, which uses it to produce graphite electrodes for Electric Arc Furnaces (EAF).
Furthermore, China continues to maintain its position as the foremost global producer of crude steel, with a production volume of 77.9 million metric tons in December 2022, surpassing both India and Japan. The countries in this region are also significant producers of steel. According to SteelMint India, India's crude steel production increased by 14.7% to reach 69.65 million tonnes (MT) during the April-September period of the 2023-24 fiscal year. According to the market research agency, the steel production in the corresponding time of the previous year was 61.06 million metric tons (MT). The rise in output was mostly due to the enhanced utilization of capacity rates, combined with the expansion of capabilities by major steel companies in India, as stated. Therefore, the abovementioned factors will enhance the regional market's growth.
The North American region is expected to grow substantially due to the increasing utilization of decant oil for various reasons. After China, the United States is the most significant worldwide producer and consumer of the carbon black market. The nation's carbon black production exceeds 1.6 million metric tons. Carbon black is utilized throughout several industries in the United States, with its primary application being in the rubber industry, particularly for tire manufacturing. According to data from the US Tire Manufacturers Association (USTMA), the total number of tires shipped in the United States in 2022 was around 340.2 million units. This increased from 335.2 million units in 2021 to 332.7 million units in 2019.
Furthermore, the US rubber sector has grown significantly and rapidly over the years. The nation remains a prominent entity in the usage of rubber. By 2028, the country's demand for rubber is expected to exceed USD 10 billion. Hence, the increasing need for carbon black in response to the surging rubber industry is projected to enhance market expansion in this region. Similarly, according to the National Clean Hydrogen Strategy and Roadmap released by the U.S. Department of Energy (DOE), the demand for clean hydrogen (H2) in the United States is expected to increase by 10 million metric tons (MMT) per year by the end of this decade. Furthermore, it is projected to reach 20 MMT by 2040 and 50 MMT by 2050. As decant oil is used as a raw material for producing clean hydrogen, its demand is anticipated to increase in the region.
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The global decant oil market is segmented by type and application.
Based on type, the global decant oil market is divided into FCC-based (fuel catalytic cracking) and RCC-based (residue catalytic cracking) decant oil.
The FCC-based decant oil dominates the global market. Fluid Catalytic Cracking is a refining technique employed in the petroleum sector to transform high-boiling hydrocarbons into more valued commodities such as gasoline and diesel. The FCC-derived decant oil is the prevailing segment due to its elevated aromatic composition and reduced sulfur level compared to the RCC-derived decant oil. FCC-based decant oil is ideal for manufacturing needle coke, carbon black, and carbon fiber, which are in high demand in the market.
Based on application, the global decant oil market is segmented into carbon black feedstock, needle coke, heavy fuel oil, and others.
The needle coke segment owns the highest market share. Needle coke is a superior petroleum coke with a particular microstructure, resulting in unique physical characteristics. The term "needle" coke is derived from the needle-like shape of the carbon particles. The essential property of needle coke is its high level of crystallinity, which measures the degree of order in the arrangement of carbon atoms.
Decant oil is used as the raw material for needle coke manufacturing because of its distinct characteristics, including a high concentration of aromatic compounds and little contaminants. These attributes render it appropriate for the manufacturing of superior-grade needle coke. The principal application of needle coke is in producing graphite electrodes, vital components in electric arc furnaces for steelmaking. Graphite electrodes of superior quality are indispensable for producing high-performance and efficient steel.
