Base Oil Report
Europe The European Group I base oils market looks as though it has got off to a fairly robust start to the year despite players expecting significant levels of downward pressure on European export Group I prices towards the end of 2017. Most market players believed significant discounts were achievable for SN150 at the end of 2017, with less sizeable discounts thought to be on the cards for SN500 as well.
Market participants suggested that seasonally weaker demand towards the end of the year and healthier supply of solvent neutrals would translate into lower prices, but significant decreases failed to materialise. Meanwhile, availability of brightstock remains comparatively tighter than other grades, with prices robust as a result. Brightstock has tended to be on the tight side over the past year or so amid Group I capacity rationalisations and healthy demand for the product.
Looking ahead into 2018, so far any hint of decreases for SN150 or SN500 have been eliminated, with robust feedstock costs and relatively healthy buying interest lending support to numbers.
The outlook for Group I prices in the Baltic Sea export market was thought to be similarly robust amid healthy demand from export markets and the domestic Russian market. In addition, there was talk of impending scheduled maintenance at refineries in the region during February and March, which was expected to lend support to base oil prices in the region.
Should the maintenance result in limited Baltic Sea base oil supply as expected, this could also lead to
tighter conditions in the domestic European market, as it tends to be one of the destinations for Russian material. The Black Sea Group I base oils export market has got off to a quiet start this year with demand from the key Turkish market at low levels due to the competitive nature of product domestically produced in Turkey. As a result, interest in imports is low. Exacerbating this lack of interest in imports is the fact that Turkish importers are still in the process of sorting out their import licences for 2018. It is unclear as to what this will mean for prices in the Black Sea region, with this market also potentially impacted by output from Russian refiners during the first quarter.
Looking towards higher number base stocks, the domestic Europe Group III base oils market has also seen a fairly firm start to the year, with players noting slightly higher numbers in the market in some cases, as supply of approved product remains tight. In addition, there are expectations of refinery maintenance in the Group III base oils market, with SK Lubricants, for example, planning turnarounds at all three of its plants in 2018. The bouts of maintenance are set to take place during Q1 and Q3, according to a source. Although the year has only just begun, the Group III and Group I markets in Europe look as though they have got off to a firm start, buoyed by firmer vacuum gasoil costs and the expectation of scheduled maintenance during the first and third quarters of the year.
US Group I and Group II prices in the US increased in January, with values under pressure from higher crude oil and vacuum gasoil costs.
The Americas base oil industry is moving strongly into Group III base stock use in 2018 as new
Sarah Trinder, Senior Editor, Manager ICIS
vehicle engines will require more of the light viscosity oils. Based upon this growing need for light viscosity base oils, 2018 will see additional Group III enter the Americas base oil market in both production and commercial presence. However, despite Group III base oils surging to the forefront of market discussion, Group II base oils remain the workhorse base stock of the industry. Group II oils are able to fulfill approximately 97% of motor oil requirements, according to comments over the past two years from Group II producers and from buyers.
Asia
Spot prices of base oils in Asia are expected to remain buoyed in the first quarter of 2018 on the back of robust demand and a regional supply crunch. This is expected to apply to both light and heavy grades across the groups, which were largely facing snug spot availability during December 2017. The existing supply crunch is attributed to a spate of production woes, including upstream vacuum gasoil unit issues, catalyst problems, as well as turnarounds at regional Group II and III units.
Major Group I units were largely stable in their production, but as availability of Group II stocks was short, demand for Group I cargoes grew among buyers who could use both Group I and II base oils for their downstream purposes.
LINK
www.icis.com
LUBE MAGAZINE NO.143 FEBRUARY 2018
71
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76
