Base Oil Report

Eashani Chavda, Markets Editor

Europe European domestic Group I and II base oils held steady in mid-July, while demand eased due to seasonal changes. Additionally, extreme supply shortages in the additives market has contributed to weaker demand as blenders are forced to slow down. Group II imports from the US are expected to be reduced this quarter due to tightness in the US market. Meanwhile, Group III base oils remain short, driving a price uptrend in early Q3.

European export prices were stable to soft in mid-July, amid limited availability and weak demand as buyers continue to hold off from making new purchases. Baltic Sea and Black Sea export values decreased as tightness begins to ease in the Baltic Sea. There are expectations that Group I domestic and export availability will improve further during August as most, if not all, refineries in the region are anticipated to be at full production following several planned maintenances in the second quarter.


The US base oils market remains very tightly supplied, supporting firm pricing despite stabilisation in other regions. Ongoing production issues, backlogs and winter storm recovery prevent inventory building, limiting availability outside of contractual agreements. Vacuum gas oil (VGO) maintains an uptrend with the rise in crude prices. Group I prices are supported by an uptick in demand as Group II has tightened. Group II prices face pressure from tighter supply stemming from various production issues. Group III prices face ongoing pressure, and spot liquidity is extremely thin.


In Asia, Group I brightstock prices were stable to firm, while SN150 and SN500 were maintained amid muted talks. Supply of brightstock remained tight, with some buyers willing to accept higher prices although Group


I demand has generally decreased in the wake of the worsening COVID-19 situation in southeast Asia and northeast Asia outside mainland China.

Asian Group II base oils prices were flat and while spot availability is generally limited, supply of 150N in domestic China was deemed to be ample, with demand for both grades relatively subdued during the seasonal lull. In India, import prices were stable as buyers continued to stay cautious due to an uncertain economic outlook on the back of sufficient availability of local material.

Group III 4cSt and 6cSt prices were firmer due to sustained tight supply of South Korean cargoes as increased volumes were being shipped to the US and Europe because of higher prices in the latter regions.

Middle East

Middle East base oils prices were mixed in the week, with gains seen in some Group I prices, while Group III prices were stable-to-soft due mainly to a drop in heavy-grade 8cSt prices. Group II import prices in the UAE were unchanged because of a lack of offers for spot bulk shipments from Asia.



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