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Base oil (Group I/II/III)
What it is
Lubricants are base oil plus additives. Group I is solvent-refined and declining; Group II and III are hydroprocessed with higher purity, and Group III enables long-drain synthetic oils
Base oil is 70-80% of lubricant cost, is crude-linked and largely imported by India
Impact on industries
- The dominant cost is imported and crude-linked, so margins compress when base oil or the rupee moves against the blender
- Group I capacity is closing globally, forcing reformulation onto costlier Group II and III grades
- Base oil prices fall faster than lubricant retail prices in a downcycle, so blenders enjoy margin expansion when crude softens
- Higher groups enable premium long-drain products, so the input shift supports the premiumisation the industry needs