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INSIGHT


Base Oil Report


Eashani Chavda, Markets Editor


Europe European domestic base oils supply remains tight, with healthy demand persisting in mid-Q4. Spot prices held steady for Group I and II in the first half of November, while Group III prices rose on the back of growing spot shortages. Activity in the UK market increased, with the pending Brexit deadline leading to additional enquiries for volumes ahead of the year-end. Sustained tightness is expected in the coming weeks, with ENI’s scheduled maintenance at Livorno, Italy approaching, while several European refineries continue to run at lower rates. European, Baltic Sea and Black Sea export values were all stable in mid-November. There was very limited activity across the export markets due to minimal supply levels. Demand from key destinations including West Africa persists, with more material expected to be available in the export markets during December.


its two-month outage. Domestic demand remains healthy, while overseas demand is even stronger, however, US suppliers are not able to satisfy strong export demand as they remain focused on their contractual obligations. Snugness could ease somewhat if typical year-end de-stocking takes place in December. Margins are positive as base oil prices continue to strengthen relative to feedstock VGO.


Asia


At the start of November, Group I SN150 and SN500 prices in Asia were generally stable-to-firm on higher buying indications, while brightstock prices rose amid continued short supply. Spot availability of Japanese and southeast Asian cargoes diminished even further, with some buyers scrambling for volumes. In the Group II market, 150N and 500/600N prices in northeast Asia were mostly stable-to-firm on higher buying indications for China-bound cargoes. However, deals and discussions were limited as supply of South Korean and Taiwanese material remained scarce. In India, market activity slowed down for the Diwali holiday while buyers were mostly on the side-lines amid volatile crude oil prices. Group III 4cSt and 6cSt prices were stable-to-firm while 8cSt prices rose, following higher deals by South Korean refiners.


US


US base oils prices were stable-to-firm in mid-November, supported by ongoing tight supply across API groups that constrained spot availability. Tightness is anticipated through the end of the year as refiners continue to temper their run rates due to weak fuels markets. Additionally, for Group II, Excel Paralubes needs to rebuild inventories after


Middle East Middle East Group I base oils prices were stable in early November, mainly reflecting range-bound offers and discussions, particularly for Group I and II, in the absence of any firm deals. Group III ex-tank UAE prices were also steady following a lack of fresh discussions for Middle Eastern-origin spot cargoes.


LINK www.icis.com


LUBE MAGAZINE NO.160 DECEMBER 2020


51


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