INSIGHT Base Oil Report Europe
The Domestic Group I market is under pressure despite recent issues caused by strikes in France as players focus their base oil volumes on this market due to the weak demand and poor margins on offer in the export market. Group II numbers were largely steady going into September, although initial spot business done for 500/600N were at lower levels. The impact of growing competition in the European Group II market continues to be felt and was thought unlikely to relent considering the gradual shift away from Group I product. Group III numbers were held steady, with talk of healthy demand and supply in the market. Group III numbers remain within a wide range, with there being a disparity between offers of approved product. European, Baltic and Black Sea export prices were flat this week, with limited liquidity and stability the overarching themes. Mediterranean sellers are focused on a mix of sales for September and October, depending on availability. Margins in the export market remain pressured and as a result, trading sources believe refiners are eyeing the domestic market as a more attractive prospect.
US
US base oil prices were largely unchanged going into September amid relative balance in the domestic market and were expected to remain so for the first half of the month. Several sources mentioned growing Group II supply, but the general view on all supply in any of the groups remained characterised as balanced to demand. Brownsville brightstock prices were assessed down this week because of weak demand in Mexico. However, Mexican buyers said demand in the region is slow with thin buying interest in heavy grades. The Group I 300 grade is an exception, showing slight gains in September compared to other light and middle grades.
Asia Pacific Group I prices in Asia including India were flat going into September, with discussions limited. Group II prices in Asia were largely maintained in subdued trade, although 500/600N FOB northeast Asia prices were stable to slightly firmer on higher selling indications. South Korean refiners remained staunch on their offers due to immense cost pressure as well
as tighter spot availability following production cuts since August. Demand for Group II heavy grade 500/600N was said to be stronger than that of light grade 150N, with some suppliers trying to sell both grades together in a bundle in a bid to move 150N cargoes. Buyers remained on the sidelines amid a severe monsoon in India, with overall demand for imports further hampered by the depreciation of the local currency against the US dollar. Group III prices were steady in a thinly discussed market for South Korean material.
Middle East
In the Middle East Group I prices slipped on lower offers for Iran-origin cargoes. While the supply of light grade SN150 in Iran remains tighter, refiners have been unsuccessful in their bids to separately raise or at least keep SN150 prices steady. This is due to sustained poor demand along with a softening in prices of heavy grade SN500. Group II import prices in the Middle East dropped going into September, despite limited offers from other South Korean and Taiwanese refiners. The Group III market was subdued as buyers continued to stay on the sidelines in view of geopolitical tensions in the region.
LINK
www.icis.com
Sarah Trinder, Senior Editor, Manager ICIS
LUBE MAGAZINE NO.153 OCTOBER 2019
67
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