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Ian Kershaw, Managing Director of Ricardo Strategic Consulting gave an engaging presentation on Long-term Trends in Vehicle Development driven by increasing regulations on vehicle emissions, greater pressure on OEMs to increase fuel economy and rebuild trust after ‘Dieselgate’, a move to Hybrid cars although by 2025 almost 97% of vehicles will still contain a combustion engine, and the move to powertrain electrification as a main thrust of OEM development.


An after conference networking drink followed at the close of Day 1.


Day 2 opened with Tom McCarthy, Chief Engineer of Ford who gave his perspective on the lubricant sector. In this year of the recently-launched ACEA 2016 engine oil sequences it was perhaps fitting that an OEM explained the move to the impact of fuel economy and CO2 regulations on engine design and vehicle


production. A panel question and answer session involving representatives from Crichton Consulting, Chevron Oronite, Neste Base Oils and SK Europe followed looking at Creating the Next Generation of Industry Requirements.


After the refreshment break Yannick Jullien from Infineum looked at Drivers Supporting the Introduction of Euro VI and the impact on base oil quality. Yannick looked at the change in technology arising from the implementation of EURO VI, the strategy used by each OEM to comply with EURO VI and the growing demand for SAE 5W-30 viscosity grade post EURO VI.


Yannick was followed by Steve Swedberg looking at Group III in Heavy Duty Engine Oil looking at the move in North America to lighter engine oil grades facilitated by Group III. Stephen reported that OEMs were moving to 10w30 as a common initial fill lubricant in


heavy duty engines to support greater fuel economy and the move to lower emissions. The final speaker of the day was Fabio Della-Giovanni, Chief Technology Officer of EGEO Oil who talked about the Long Term Prospects for Re-Refiners. Fabio spoke about the levers already being in place to support greater re-refining including legislative, fiscal and environmental stimuli.


Traditionally the ICIS World Base Oils and Lubricants conference does not fail to live up to expectations for its high quality content and great networking opportunities, and this year was no exception.


David Wright Director General


United Kingdom Lubricants Association


LINK www.icisconference.com


Base Oil Report


European export base oils prices have continued to soar as spot supply has completely dried up.


Although there were hints of technical issues at the start of the year, most Group I refineries were thought to be running well, leaving little explanation as to why spot availability has become so constrained. In addition, the spread between vacuum gasoil (VGO) and base oil prices has widened significantly in recent weeks, which would suggest margins should be healthy.


Hypothetically, this would suggest that producing base oils would be an attractive prospect and that if that was the case, spot supply should be fairly good. According to ICIS data, the spread between VGO and European export SN150 prices, for example, had increased from $271-282/tonne on 4 April, to $317-327/tonne by 25 April.


Some players suppose that more business is being done on a contractual basis in an effort to lessen exposure to volatile spot price movements and that this has meant fewer spot volumes are available.


In addition, some players are focusing supply more on the European domestic market and this could also be diverting supply from the export market.


It must be said that although there is also a tight feel to supply conditions in the domestic Group I market, it is thought to be less constrained than the export market at present. Despite this, domestic Group I prices have been steadily rising in line with market fundamentals and the increases in the export market.


Sources suggest that the refinery maintenance that took place in the first quarter of this year and healthy demand are the main drivers behind the tightness also being seen in the domestic Group I market.


Group II and Group III base oil prices are also firming, again on the back of limited availability amid outages and turnarounds at refineries.


The Group III market has been hit with supply issues following an outage at Shell and Qatar Petroleum’s gas-to-liquids (GTL) plant.


The plant is ramping up production, Shell confirmed on 20 April, after the 1.5m


tonne/year site was forced to shut earlier this year to fix 18 gasifier units.


In summary, the European base oils market has gone into Q2 with limited availability and there is little consensus as to when supply conditions will ease, particularly with confusion in the market as to what is the main driver behind constrained availability. There has been suggestion that some refineries are forecasting larger volumes in the coming months but this is not something being seen widespread in the marketin the market.


Sarah Trinder Senior Editor, Manager ICIS


LINK www.icis.com


LUBE MAGAZINE NO.139 JUNE 2017


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