INSIGHT Base Oil Report
Europe The European Group I base oils market seems to be entering a more stable period following increases prompted by tight market conditions earlier in the year, particularly for the export market. Although the Group I market is not overflowing with volumes, conditions are more balanced as the refinery maintenance season comes to an end.
There is still talk of a few potential issues at refineries in Europe but this has not been widely confirmed, and even if this is the case, there has not been a significantly noticeable impact so far.
A tightness of Russian base oil volumes amid refinery maintenance has also had an impact on the European markets this year. Group I capacity closures in recent years have meant that the European market has become more reliant on export Group I volumes from the Baltic Sea region. However, the Baltic Sea export market has also experienced limited availability during the first part of the year, which was further exacerbated by bouts of scheduled refinery maintenance in Russia. As a result, values for Baltic Sea export volumes rocketed upwards to levels that, at times, encroached on European export prices.
Both Baltic and European Group I values are believed to have reached a ceiling now, with sellers facing resistance from buyers towards higher offers. There are still some who see room for increases in the European Group I markets, but others believe any further price hikes could be difficult to push through. The European Group II and Group III markets have been largely stable in recent weeks.
Group II numbers in the US have been seeing a firmer trend recently, but even though Europe is a net-importer of this product, the uptrend in the US market has underpinned current values in Europe, rather than result in any increases outside of current ranges.
Some note firmer prices in the Group III market, particularly for some molecules of approved product, but these have not been widely confirmed as yet. There is talk of tighter conditions for 6cSt product and suggestion that it is trading at a premium to 4cSt product as a result.
Recent bouts of maintenance have been noted in the Group III market at plants in Korea and also at Shell’s and Qatar Petroleum’s gas-to-liquids (GTL) base oil unit, but there has not been a major impact on the European supply.
Sarah Trinder, Senior Editor, Manager ICIS
Crude oil and vacuum gasoil prices have been robust in recent weeks, and may have an overarching influence on the downstream base oils markets.
US Growing competition between Group III base oil sellers in the US did exert some downward pressure on values earlier in the year but these are now showing signs of stabilisation.
Posted prices for Group I and Group II have increased going into May, with this lending support to domestic prices. Firmer crude oil and vacuum gasoil values are resulting in bullish market sentiment.
Asia
Asian base oils spot prices have seen mixed outcomes recently, with some grades such as Group I SN500 and brightstock registering drops whereas Group II 150N prices were buoyed by snug spot availability.
Going forward, spot prices of Group I SN500 and brightstock base oils could face downward pressure in the near future, as demand continues to remain sluggish. Weak cargo uptake among regional buyers is expected to exert downward pressure on spot prices in the Asian market for May shipment cargoes.
LINK
www.icis.com
LUBE MAGAZINE NO.145 JUNE 2018
59
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