Bright stocks are mostly used to blend mid- to high-viscosity lubricants, such as automotive and industrial gear oils, marine cylinder oils, greases, monograde engine oils and process oils. Bright stocks, along with other neutral oils, are used in varied proportions in lubricant formulations to blend differing grades of finished lubricants.

In automotive applications, bright stocks are used to formulate heavier engine oil grades such as SAE 20Ws and monogrades. However, demand for such engine oils is declining across the world and is mostly concentrated in regions such as Africa and the Middle East, South America and certain parts of Asia-Pacific and Eastern Europe. Bright stocks are widely used in formulating gear oils, which represent a key demand outlet. Products such as automatic transmission fluids (ATFs) are produced in a lighter-viscosity range and do not require bright stocks in their formulations.

On the industrial side, rubber process oil, gear oil, marine and greases are the key applications of bright stocks (see Figure 1).


Figure 1. Global bright stock demand, 2020.

Resilience of bright stocks
Over the last 15-20 years, the global Group I market has been facing challenges of declining technical demand and growing competition from high-performance base stocks. Consequently, Group I supply has suffered, with the global Group I base stock capacity declining almost 20% in the decade 2010-2020. However, bright stock supply has displayed resilience, and its capacity reduction (9% reduction on 2010 capacity) was much smaller than that of Group I.

While Group I capacity has been continuously getting rationalized with no new capacity set up in more than 15 years, bright stocks capacity has been supported by new capacity additions and expansion, both greenfield and debottlenecking. Some companies have expanded capacity in the past five years, while others have ceased production in that same time. Thus, bright stock has always remained a product of interest despite declines in the overall Group I market (see Figure 2).


Figure 2. Global Group I base stocks and bright stocks capacity, 2010 to 2020.

The resilience of bright stocks can be attributed to a variety of factors.
• There are limited substitutes available in the market. Bright stocks have a very high viscosity, and producing them in a Group II refinery is replete with challenges. These cannot be produced in a Group III refinery.
• Bright stock production offers a higher margin than other Group I grades to refineries producing it, which provides an extra cushion against the deteriorating Group I market conditions (see Figure 3).
• Synthetic substitutes such as polyalphaolefins and polyalkylene glycol are highly expensive. Only polyisobutylenes come close to offering any techno-commercial rationale for substitution.


Figure 3. Bright stock premium vis-a-vis other Group I base stock grades in Northwest Europe, 2000 to 2022.*

Sustainability and its impact Historically, Group I closures have been driven by market supply and demand forces. Growing competition from Group II and III base stocks edged out Group I base stocks, even from several industrial applications where the use of Group II and III base stocks is not technically warranted. As the use of Group II and III base stocks grew in a wide range of formulations, blenders preferred using them in other applications as it allowed them logistical and storage advantages. Thus, Group I base stocks suffered, and their demand declined more rapidly.

However, over the last couple of years, the market has undergone significant changes, and the global base stock supply landscape is anticipated to alter by factors beyond the supply-demand interplay. To meet their carbon emission reduction target, energy companies across the world are rejigging their energy mix by focusing more on renewables and pledging to reduce their footprint in the fossil fuel segment. Some companies have already announced closures of refineries to meet long-term decarbonization goals, and others are expected to eventually take place even if closures are deferred for a few years.

Future supply outlook and alternatives
The demand outlook for bright stocks is better than that for other Group I grades, resulting in a continued interest in this market. However, there is a concern regarding bright stocks availability, as it could decrease with any Group I closure in the future since some Group I plants also house a bright stock facility. To address the likely shortfall in the bright stock market, two new bright stocks capacities are planned to be set up by 2025, both of which will produce bright stocks in a Group II refinery.

Key advantages of a Group II bright stock are its lower sulfur content and clarity in color. This makes it suitable for applications like greases (where its clarity improves the color of the final product) and applications where low sulfur content is desirable. On the flip side, a Group II bright stock has inherent solubility disadvantages. However, this shortcoming can be addressed by adding solubility-enhancing fluids.

One of the simplest means to address bright stock shortfall is reformulating by using higher proportions of heavy neutrals and lesser quantities of bright stock. However, there is a limit to which this can be applied since substituting beyond a limit would require adding a thickener. There are a few synthetic substitutes available for meeting the bright stock deficit, including polyisobutene (PIB), polyalphaolefin (PAO) and polyalkylene glycol (PAG), of which PIB presents the most techno-commercially feasible solution.

There are varying levels of flexibility in replacing bright stock with substitutes in different applications. Certain applications such as marine are influenced by OEM recommendations. Substituting bright stock would require a great amount of investment for approvals, which is generally a long-drawn-out process. Other applications are relatively less dependent on OEM approvals. Bright stock substitution in these applications is dependent on factors such as technical suitability, availability and prices.

Summary
Bright stock supply constraints, which are expected to evolve in the future, make the product a deficit commodity. With the acceptance of Group V and Group II bright stocks within the industry, a new horizon has opened for the market. However, the volumes generated from these classes of bright stock may not be able to offset the declining supplies of base stocks arising due to the closure of Group I base stocks plants.

The increasing shortage in bright stock, in the long run, is expected to increase its price, which, in turn, will raise the premium with respect to light neutral grades. The increase in premium will lead to substitution growth, as well as a decrease in demand for cost-sensitive applications.

Moreover, supply shortages will encourage blenders to develop new formulations and reformulate lubricants with PIB and other substitute products. Although substitute products for bright stock face relatively fewer barriers, pricing and widespread availability would be the major limiting factors that substitute product manufacturers need to focus on.

Kline’s “Global Business Outlook for Brightstocks” is scheduled to be published in Q1 of 2023. The report will focus on key trends, developments, challenges and business opportunities in the global bright stock market, covering Africa and the Middle East, Asia-Pacific, Europe, North America and South America.

Anuj Kumar is industry manager at Kline & Company in the Energy division. You can reach him at anuj.kumar@klinegroup.com. Kline is an international provider of world-class consulting services and high-quality market intelligence for industries including lubricants and chemicals. Learn more at www.klinegroup.com.