INSIGHT Base Oil Report
Europe European Group I values were steady over the summer period with both the domestic and export markets balancing out amid quieter market conditions.
That said, brightstock supply remains tighter in comparison to SN150 and SN500, with prices both on the domestic and export fronts elevated.
Robust prices for brightstock have brought the opportunity for countries outside of Europe to export into the region, with some players believing brightstock values could ease as a result.
However, for now it remains unclear as to how much product is being actively imported into Europe.
The Baltic Sea export market is displaying a mixed picture, with players having wildly different price expectations and outlooks on fundamentals. Some see firmer prices supported by planned maintenance and strong domestic Russian demand, while others see softer numbers as a result of ample supply.
Sarah Trinder, Senior Editor, Manager ICIS
Forex fluctuations in the Black Sea export market have brought interest in imported base oils in Turkey to a standstill. The weaker Turkish lira versus the US dollar has meant that domestic production is more attractive versus imports.
US
August saw a reduction in prices for Group I and Group II base oils but Group III numbers had largely held steady. However, lower numbers for Group III product were developing amid greater competition between suppliers.
It is unclear if the lower prices are in discussion or if these are actually being achieved in finished transactions.
It is also unclear if business at the lower prices is on fully certified Group III base oils or if the lower prices are for uncertified Group III base stocks.
In addition, a tender from Egypt is expected to continue for the rest of the year, with some suggesting this demand could maintain pressure on brightstock supply.
Planned maintenance is expected at a Group I refinery in southern Europe during September but players are not expecting a significant impact from this, with the refiner believed to have built up inventories beforehand.
Group II values in Europe were stable during August, despite some slight decreases being noted in the US. Enquiries for Group II material are being noted in the market for September, with upcoming ACEA 2016 regulations, which kick in from December 2018, expected to boost Group II demand.
The Group III market has also seen stable conditions, although there has been talk of firmer prices for approved product in recent weeks. However, widespread confirmation of this is still pending.
Meanwhile, Mexico was said to be routinely importing brightstock and other heavy grades from Brownsville in Texas.
Asia
Supply of Group I and II heavier grades in Asia is expected to stay long, although firm upstream crude prices will likely curtail the extent of any price downside.
Demand may not see any significant improvement in September as buying appetite had remained lacklustre even at the end of August, which is typically the onset of the traditional peak demand season.
Group III supply from northeast Asia could be reduced as a northeast Asian refiner was heard to be cutting its production in September, but this could not be confirmed.
LINK
www.icis.com
LUBE MAGAZINE NO.147 OCTOBER 2018
67
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