1 Global Light Cycle Oil (LCO) Market Insight Analysis
The global Light Cycle Oil (LCO) market will be valued at USD 19623 million in 2024 and is expected to grow at a CAGR of 1.36% during 2024-2033.
Light cycle oil (LCO) is a by-product of the fluid catalytic cracking (FCC) process in petroleum refineries. It has a higher density and boiling point range than diesel but lower than heavy fuel oil. LCO can be used as a feedstock to produce diesel, gasoline, lubricants, jet fuels, marine fuels, and other high-value hydrocarbon products. Upgrading LCO can be achieved in several ways, including hydro treating, high pressure hydrocracking for full conversion of LCO into naphtha, and a more optimized partial conversion hydrocracking process. LCO is used in a variety of industries including petrochemicals, power generation, manufacturing, and shipping.
Figure Global Light Cycle Oil (LCO) Market Size (M USD) and CAGR (2024-2033)
2 Light Cycle Oil (LCO) Market Growth Drivers and Restraints
The growth of the global LCO market is driven by several key factors. Firstly, the expansion of the shipping industry has increased the demand for marine fuel, a significant application area for LCO. The international shipping industry, responsible for approximately 90% of world trade transportation, continues to grow, driving up the demand for LCO as a marine fuel component. Additionally, the rising demand for petroleum, especially diesel, across various industries contributes to the market’s growth. Diesel’s efficiency and lower greenhouse gas emissions compared to gasoline make it a preferred fuel for heavy-duty operations.
However, the market also faces limitations. High demands on refinery processing technology pose a challenge, as LCO requires specific refining processes to meet fuel standards. Regulatory compliance and licensing add complexity to the market, with international regulations and national policies influencing the import and export of LCO. These factors can limit the market’s growth potential and increase operational costs for companies involved in the LCO supply chain.
3 Technological Innovations and Mergers in the Light Cycle Oil (LCO) Market
The LCO market is experiencing significant technological innovations and corporate restructuring. Advances in refining technology are enabling the production of cleaner and lower-sulfur fuels, addressing environmental concerns and regulatory requirements. Companies are investing in advanced catalysts and technology to produce LCO with lower sulfur content, thereby reducing emissions.
Additionally, there is a growing trend of corporate mergers and acquisitions in the industry, as seen with ExxonMobil’s merger with Pioneer Natural Resources. These strategic moves aim to consolidate market positions, enhance technological capabilities, and improve operational efficiencies.
4 Global Light Cycle Oil (LCO) Market Size by Type
The global LCO market is segmented into two main types based on sulfur content: Below 2000 ppm and Above 2000 ppm. In 2024, the Below 2000 ppm segment is expected to account for 35.75% of the total market value, with a forecasted value of 7,015.41 million USD. This type of LCO is in high demand due to its lower sulfur content, making it more suitable for applications requiring cleaner fuels.
Conversely, the Above 2000 ppm segment is projected to hold a 64.25% share of the market value, totaling 12,607.57 million USD. Despite its higher sulfur content, this type of LCO remains crucial for certain industrial applications and as a blending component in fuels. The market segmentation highlights the diverse applications and demands for LCO, with each type serving specific industry needs and regulatory compliance requirements.
Table Global Light Cycle Oil (LCO) Market Size and Share by Type in 2024
|
Type |
Market Size (M USD) 2024 |
Market Share 2024 |
|---|---|---|
|
Below 2000 ppm |
7015.41 |
35.75% |
|
Above 2000 ppm |
12607.57 |
64.25% |
5 Global Light Cycle Oil (LCO) Market Size by Application
In 2024, the market is expected to be dominated by two primary applications: Marine Fuel, Blended Ordinary Diesel, and Others.
Marine Fuel is the largest application segment, with a market value forecasted at 10,539 million USD in 2024. This segment is driven by the shipping industry’s demand for compliant fuels that meet international sulfur content regulations. The International Maritime Organization (IMO) has set a global sulfur limit of 0.5% for marine fuels, which has increased the demand for LCO as a blending component to reduce sulfur content in marine fuels. The growth in international trade and the need for efficient, low-emission fuels further bolster this segment’s market value.
Blended Ordinary Diesel is another significant application, with a market value of 6,804 million USD in 2024. LCO is used to blend with regular diesel to enhance its properties such as lubricity and viscosity, making it suitable for transportation and automobiles. This application benefits from the increasing demand for diesel fuel in various industries, including construction, mining, and transportation. The need for cleaner burning fuels and the use of LCO to meet these demands contribute to the growth of this segment.
Table Global Light Cycle Oil (LCO) Market Size and Share by Application in 2024
|
Application |
Market Size (M USD) 2024 |
|---|---|
|
Marine Fuel |
10539 |
|
Blended Ordinary Diesel |
6804 |
|
Others |
2280 |
6 Global Light Cycle Oil (LCO) Market Size by Region
North America is forecasted to have a market value of 1604.38 million USD in 2024. The region’s market is influenced by its developed economy and high demand for refined petroleum products. The United States, in particular, plays a significant role due to its large consumer market and investment in production plants and equipment. The region’s focus on innovation and technological advancements in refining processes also contributes to its market share.
Europe is expected to hold a substantial market share, with a forecasted value of 5411.81 million USD in 2024. Europe’s market is characterized by its advanced industrial sectors and high GDP, which drive the demand for LCO in various applications, including marine fuel and blended diesel. The region’s commitment to environmental sustainability and the reduction of carbon emissions further influence the market dynamics.
China, as the world’s second-largest economy, is projected to have a market value of 12.85 million USD in 2024. The country’s rapid industrialization and growth in the manufacturing sector contribute to the demand for LCO, particularly in the production of petrochemicals and other industrial applications. China’s strategic focus on economic development and industrial expansion plays a crucial role in shaping its market share.
Japan, known for its high investment rate in production plants and equipment, is forecasted to have a market value of 1070.95 million USD in 2024. The country’s reliance on imported raw materials and its position as a leading manufacturer of electrical appliances, automobiles, and other high-performance products drive the demand for LCO. Japan’s focus on quality and technological innovation also contributes to its market share.
The Middle East and Africa region, with its abundant natural resources and significant role in global oil production, is expected to have a market value of 2855.85 million USD in 2024. The region’s market is influenced by its geopolitical importance and the need to diversify oil and gas imports. The region’s economic development and the growth of its industrial sectors contribute to its market share.
India, with its growing economy and large population, is projected to have a market value of 1878.14 million USD in 2024. The country’s increasing demand for energy and its position as a major exporter of agricultural products and other commodities contribute to the demand for LCO. India’s focus on economic growth and industrial development plays a crucial role in shaping its market share.
Latin America, known for its rich biodiversity and agricultural exports, is forecasted to have a market value of 1605.10 million USD in 2024. The region’s market is influenced by its diverse topography and the need for renewable energy sources. The region’s economic development and the growth of its industrial sectors contribute to its market share.
Figure Global Light Cycle Oil (LCO) Market Size (M USD) by Region in 2024
7 Global Light Cycle Oil (LCO) Market Analysis by Major Players
7.1 GS Caltex
Company Introduction and Business Overview:
GS Caltex, established in 1967 and headquartered in South Korea, is a leading private oil company in Korea. It operates refinery complexes, service stations, and R&D capabilities in South Korea.
GS Caltex is a major player in the heavy chemical industry, fostering the development of key industries in petroleum and petrochemicals. The company offers a wide range of petroleum and petrochemical products, including jet fuel, marine fuel oils, homo polypropylene, impact polypropylene, Para xylene, random polypropylene, benzene, toluene, and solvents. It also provides shipping and international trading services through its subsidiaries.
Products:
GS Caltex produces high-quality petroleum products from its oil refining facilities with a daily capacity of 800,000 barrels. It imports 80 types of crude oil from about 30 countries to ensure a stable supply. The company’s products are used to satisfy domestic demands for industrial and transportation purposes and are exported globally.
Market Performance in 2024:
In 2024, GS Caltex is projected to achieve sales of 6,857 K Tons, with a market value of 2,901.77 M USD. The company’s gross margin is expected to be 21.64%, reflecting its strong profitability and efficient operations.
7.2 Valero Energy
Company Introduction and Business Overview:
Valero Energy, established in 1980 and headquartered in the USA, is the world’s largest independent petroleum refiner and a major producer of low-carbon transportation fuels.
Valero Energy operates 15 petroleum refineries in the United States, Canada, and the United Kingdom, and 12 ethanol plants in the U.S. Midwest. The company is also a joint venture member in Diamond Green Diesel Holdings LLC (DGD), which owns renewable diesel plants. Valero produces and markets transportation fuels and petrochemical products, including gasoline, diesel, low-sulfur diesel, ultra-low-sulfur diesel, distillates, asphalt, jet fuel, petrochemicals, lubricants, and other refined products.
Products:
Valero offers a comprehensive range of fuels and petrochemical feedstock essential to modern life. It is a leader in fuels production, with a 3.2 million barrels per day throughput capacity. The company’s products include quality gasoline, high-quality diesel fuel, renewable diesel, and ethanol.
Market Performance in 2024:
In 2024, Valero Energy is expected to record sales of 2,288 K Tons, with a market value of 975.10 M USD. The company’s gross margin is projected to be 18.85%.
7.3 SK Innovation
Company Introduction and Business Overview:
SK Innovation, established in 1962 and headquartered in South Korea, is a major energy company with a focus on sustainable energy solutions.
SK Innovation operates through nine subsidiaries, including SK Energy, SK Geo Centric, SK On, SK Enmove, SK Incheon Petrochem, SK Trading International, SK IE Technology, SK Earthon, and SK Enterm. The company refines crude oil to produce LPG, gasoline, jet fuel, diesel fuel, naphtha, and chemical products such as para-xylene. SK Innovation is committed to using advanced technologies to build a sustainable energy future.
Products:
SK Innovation’s marine fuel oil (VLSFO) is a high-quality product that fully meets IMO 2020 standards by blending low-sulfur crude oil. The company’s marine fuel is produced in compliance with the international 0.5% sulfur content limit for bunker C oil, ensuring environmental compliance and high-quality standards.
Market Performance in 2024:
In 2024, SK Innovation is forecasted to achieve sales of 2,294 K Tons, with a market value of 958.55 M USD. The company’s gross margin is expected to be 18.72%.
