INSIGHT Base Oil Report

Europe Group I values in Europe are under an element of pressure as the year gets under way, with improving availability and seasonally slower demand weighing on numbers. Price stability is mostly seen in Europe’s Group II market, thanks to a balanced market, though some feedback pointed towards a softer trend emerging. The market is in wait-and-see mode for the arrival of domestic volumes from ExxonMobil’s new plant at Rotterdam, with a production date unclear beyond expectations for the first quarter of 2019. Though some see a quiet picture for Group III in Europe, one supplier noted strong offtake for semi-approved material for December and January. Players have largely reported rollovers into January, although one seller said it was able to achieve increases of €10-20/tonne in some cases due to higher-than-expected demand.


Fluctuations in crude oil and the seasonally quieter state of the market at the start of the year have made for an uncertain outlook for US base oils. Chevron confirmed that it would decrease its Group II posted prices on 8 January but other posted prices were unclear at the time of writing. Amply supplied market conditions on a global scale continue to thwart any US export opportunities. Market participants said domestic market values were stable early in January but remain under pressure for most grades because of ample supply and lower crude oil prices. A lack of spot opportunities are weighing on Group II export values. It was heard but not confirmed that some producers are considering cutting back operating rates to bring supply into improved balance with demand.


Spot Group II prices in Asia are on a downtrend on the back of healthy supply from South Korea and Taiwan. Group I prices in the region were also under pressure from muted levels of activity, with buyers displaying lukewarm interest in an SN500 and brightstock tender during the first week of January. Group III values were stable to soft, with one refiner said to be lowering its offers. Group II prices are expected to soften further due to sustained lengthy supply from several South Korean refiners and a Taiwanese refiner. Group I prices

will likely track Group II prices to a certain extent, although relatively shorter supply of the former is expected to constrain the price downside. Overall demand in Asia including India is expected to remain sluggish in January as global economic concerns in 2019 will weigh on market sentiment. Demand is unlikely to see any significant improvement until the second half of February at the earliest after the Lunar New Year, as downstream plants in China and Taiwan especially, will be closed for at least one to two weeks from late January.

Sarah Trinder, Senior Editor, Manager ICIS

Group III regional chart

Regional prices




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