INSIGHT Base Oil Report
Europe The European base oil market is feeling an impact from fluctuating exchange rates and zigzagging crude oil prices across all three types of base stock.
Both domestic Group I and Group II values have seen increases in euro terms recently as a result of a stronger US dollar versus euro exchange rate.
Crude oil prices have also brought more of a bullish atmosphere to the market as, despite movements both up and down, values are elevated versus last year. There has been some suggestion in the past quarter that refiners may look to produce other more lucrative products in the refinery products chain should their base oil margins not improve.
In the Group III market, there is an element of pressure from foreign exchange but the main points of interest in these markets at the moment is talk of a wide spread between approved and unapproved product, and also, a premium emerging for 6cSt versus 4cSt product.
Approved and unapproved prices are within a wide spread, with an a flow of unapproved product from Russia and Abu Dhabi entering Europe, while approved product has been tighter in supply amid planned turnarounds earlier in the year.
A premium has emerged for 6cSt over 4cSt product because of higher demand and lower production of the former grade. These two grades had been trading at parity for a prolonged period.
Asia
Asian Group I and Group II base oils have marked drops recently on the back of persistently lacklustre demand for July shipment cargoes, supply overhang, ample buyers’ inventories and increasing resistance to firm spot pricing seen since late 2017. Buying
Sarah Trinder, Senior Editor, Manager ICIS
sentiment in the key import market of China was described as very weak because of sufficient inventories, along with unfavourable exchange rates brought about by the heavy depreciation of the Chinese yuan against the US dollar.
US
US base oil fundamentals are broadly balanced moving into July. Demand is healthy amid the summer driving season boosted by the 4 July holiday.
Blenders continue to seek ways to maximise performance against cost. Group II is the dominant base stock for passenger car motor oils (PCMOs) in the US. Group III is required in increasing formulations to deliver lighter viscosity oils for PCMOs.
Group I is a key factor for heavy duty vehicles and the intense friction loads for power generation and other heavy industrial equipment.
LINK
www.icis.com
LUBE MAGAZINE NO.146 AUGUST 2018
59
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