INSIGHT Base Oil Report
Europe European domestic Group I Prices were stable in early November, although some downwards pressure is being seen given lengthier supply and weaker demand heading towards the end of the year. UK demand seems to be subdued in November, compared to previous years. Following the Lubrizol fire earlier in the quarter, there is some talk of Group I formulations being replaced by Group II. Values for Group II were steady amid balanced market fundamentals. Demand remains strong, while there are healthy stocks of all Group II grades. N500/600 is said to be slightly less available than the lighter grades. Group III prices were stable in early November, though some pressure is being felt amid ample stocks of material, particularly in the 4cSt market. Buying interest remains at steady levels as fuel blending continues.
Demand is likely to weaken across the domestic markets on seasonality, with destocking activities due to begin in December. European, Baltic and Black Sea export prices were stable, with limited activity seen across the markets. There is some downwards pressure being seen on SN500 and brightstock values in the European export market. Tightening supply is being seen for lighter grades in the European and Baltic export markets, while heavier grades are more balanced.
US
US domestic base oil prices were steady in early November, while export prices have moved down slightly amid ample supply and continued sluggish demand, particularly for Group II. US supply levels outstrip demand as inventories built ahead of fourth quarter turnarounds as well as increased import volumes and limited exports earlier this year. Pressure continues on Group II prices, and length has been managed through exports with steep discounts offered to some markets. Outages and exports are expected to mitigate US length.
Asia Pacific Group I brightstock prices in Asia were stable-to-firm in early November, while SN500 prices were steady. Group II prices were flat across the board amid limited business and a wide gap between buying and selling
ideas, with South Korean refiners staunch on their offers on the back of generally firm crude oil prices. Some of these refiners have less pressure to offload their cargoes following output cuts since August this year. Buying interest for Group II imports in Asia, including India, was muted as buyers held back on their purchases amid largely stagnant demand as well as suppressed local prices in some countries such as India. Group III prices of 4cSt and 6cSt were stable-to- soft following lower deals by a South Korean refiner.
Middle East
In the Middle East, Group I prices are steady in early November in the absence of discussions for Iranian cargoes. Group II prices are also steady for the time being amid muted discussions. Many buyers are staying out of the market due to sufficient inventory levels and as prices for Asian cargoes are seen as unworkable for buyers in the UAE. Offers for deep-sea origin material, due over the next few months, were also heard at competitive levels relative to Asian prices. Group III prices are firmer on higher Middle East cargo prices.
LINK
www.icis.com
Samantha Wright Markets Editor, ICIS
LUBE MAGAZINE NO.154 DECEMBER 2019
63
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