The market for transformer oil is expected to grow at a CAGR of 5.1% from its anticipated market size of USD 2805.7 Million in 2020 to USD 4218.9 Million by 2030. The main factors influencing the growth of the transformer oil market are the expansion of electric grids in developing nations and the modernization of electric grids in developed economies as a result of rising industrialization and urbanisation.
Effect of COVID-19 on the market for transformer oil
Manufacturers of specialty chemicals have experienced a range of effects from the COVID-19 pandemic. Most transformer oil producers have been able to lower their raw material costs as a result of the decline in crude oil prices. However, because of the supply chain breakdown, manufacturers are having problems with logistics and procurement. In addition, as storage requirements for transformer oil producers have increased due to the decline in demand, production costs have increased, which will have a cascading effect on the selling price of the transformer oil. The refiners and storage depots have been expanded, the product line has been expanded through new product launches, and other inorganic strategies have all been adopted by the transformer oil manufacturers to adapt to these dynamic market conditions.
Dynamics of the Transformer Oil Market
Electric grid expansion in the APAC region is a driving force
Additionally, it is anticipated that T&D investment on the Indian subcontinent will increase at a CAGR of 5.1% between 2021 and 2028, significantly expanding the area’s electric grid network. Developing nations in the APAC region are investing in the expansion of the T&D system and grid network to meet the potential rise in power demand brought on by the region’s quick industrialization and urbanisation. The installation of new transformers and switchgears as a result of the grid network and T&D system growth will increase the need for transformer oil.
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Restrictions: Environmental issues related to the use of transformer oil with a mineral base
Because of its high efficiency, ease of accessibility, and helpful chemical features, such as a good pour point at low temperatures and great thermal cooling capability, naphthenic mineral oil has long been the most popular transformer oil. Due to its exceptional oxidation stability, paraffinic mineral oil has gained popularity throughout time. However, because paraffinic and naphthenic mineral oils are made from highly refined, purified, and processed petroleum, they are both very unlikely to decompose naturally. The mineral oil is made from a non-renewable resource and has a biodegradability range of 0 to 40%. The developed and developing economies of the world are moving toward implementing green and environmentally friendly technologies. In the near future, this transition might prevent the use of mineral-based transformer oils, and in the long run, it might limit the market for mineral oils.
Possibilities include expanding international trade in electricity.
The trade of electricity across borders has recently gained momentum, and the number of economies taking part in it has grown significantly over time. For instance, the European Union (EU) intends to build a pan-European grid and strengthen the power grids of the various nations. Recent proposals by the Indian Energy Exchange (IEX) to trade electricity across borders with nations like Myanmar, Bhutan, Sri Lanka, Bangladesh, and Nepal aim to establish an integrated South Asian regional power market. Over the next few years, these developments are likely to lead to the grid network’s expansion and the construction of new transmission lines, which will ultimately increase demand for transformers, switchgears, and transformer oils.
Issues: Variations in the price of crude oil
The most crucial source of energy for conducting economic activity is crude oil, and the volatility in the price of crude oil has a big impact on the stability of the economy. A highly processed, refined, and filtered byproduct of crude oil is transformer oil. As a result, the manufacturers of transformer oil will be directly impacted by changes in the price of crude oil, which would result in an unpredictable position. Since the decline in 2014, the price of crude oil has fluctuated regularly, and the downward trend has persisted through 2016. However, prices had been on the rise in 2017 and 2018, which increased demand for activities that improve production. In 2019 and 2020, prices fell once more, with a minor increase in the first quarter of 2021. The choice for the manufacturers of transformer oil to purchase crude oil at the proper price becomes challenging due to these uncertain scenarios brought on by the fluctuation of crude oil prices.
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Important Market Players
Nynas AB (Sweden), Ergon, Inc. (US), PetroChina Company Limited (China), APAR Industries (India), and Sinopec Lubricant Company are the industry leaders for transformer oil (China). To increase their market share between 2014 and 2021, the corporations implemented growth methods such investments, expansions, partnerships, collaborations, alliances, and joint ventures.
- North America
- The U.S.
- The UK
- Rest of Europe
- Asia Pacific
- South Korea
- Southeast Asia
- Rest of Asia Pacific
- Latin America
- Rest of Latin America
- Middle East & Africa
- South Africa
- Rest of Middle East & Africa