Base Oil Report

The outlook for the European base oils market is mixed at present, with players uncertain as to whether the devastating impacts of Hurricane Harvey seen along the US Gulf coast would have an indirect effect on supply and pricing in Europe in the coming weeks.

The Group I market experienced quieter market conditions over the summer period and this is said to have boosted supply in the market, although to what extent is unclear.

Some players in the European Group I domestic and export markets are noting an element of downward pressure on prices as a result of gradually improving availability. However, others note stability and caution that the impact of the hurricane in the US is unclear and could bring about a change in European supply fundamentals.

The only Group I grade that may buck the potential for a downward trend is brightstock, with supply tending to be on the tight side amid brief production issues with one refiner and some noting a lack

of an incentive to produce brightstock considering the narrow spread between Group I base oil grades.

Some European players believed players in the US could focus product more on the domestic market amid outages which occurred there and believe this could lead to fewer exports into Europe, bringing about tighter availability.

As with the Group I market, players say it is too early to determine whether prices for Group II base oils have changed following the issues along the US Gulf coast. Europe tends to be a net importer of Group II base oils, with a large portion of these volumes coming from the US but as of yet, players had not had any notable updates on the status of their cargoes.

Prices for Group II material did firm slightly going into September but largely remain within a steady range.

In the Group III market, the gap between unapproved and approved product in Europe remains wide for both 6 cst and 4 cst product.

There has been suggestion that higher demand for 6 cst base oils has resulted in a premium for this product over 4 cst price levels in recent weeks.

In addition, there was talk of unapproved 4 cst product being offered from Russia at significantly lower price levels but most sources believed this was not reflective of overall price discussions.

Generally, a clearer picture of overall European market direction is expected to emerge in the coming weeks, as US refiners along the Gulf coast gradually recover following the hurricane and more clarity surrounding European market supply emerges.

Sarah Trinder Senior Editor, Manager ICIS


Executive Industry Briefing Autumn 2018

A two day residential course giving senior industry managers an overview of the fundamental areas of the Lubricants industry including exploration, refining, manufacture and marketing.

Day one will cover topics such as:

• Crude Oil, Exploration & Refining • Lubrication Fundamentals, Tribology & Wear Mechanisms

• Base Oil Types & Characteristics • Additive Technology • Power Generation & Marine • Automotive

Day two:

• Off-Highway & Mining Equipment • Industrial Lubricants • Cement Industry • Railway Lubricants • Greases • Metalworking Fluids • Used Oil Analysis • Oil Industry Glossary of Terms • Oil Industry Abbreviations

Who Should Attend? Senior managers working in leadership roles within the Lubricants Industry , as well as those who need to be brought up-to-speed on all the relevant information pertinent to the UK & European lubricants markets. It is particularly pertinent for those working in non technical areas of the industry, such as legal, marketing, HR and finance.

Date and Venue: The next course will be held on 7th and 8th November 2018.

Cost: The cost for UKLA members will be £549 (excl VAT) and for non members £649 (excl VAT). This fee includes all course materials, meals and accommodation for the first night.

Trainer: The trainer will be Rod Pesch CChem MRSC. With over 50 years experience in the Oil Industry few people can beas well placed to lead this executive overview of the sector. T:+44 (0)1442 875922

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