INSIGHT Base Oil Report
Eashani Chavda, Markets Editor
Europe European domestic Group I base oils spot prices softened by double-digits following sluggish activity in the first half (H1) of January. Supply remains healthy while buying appetite is hand-to-mouth in early 2022. The Group II market held steady in balanced conditions while Group III is balanced-to-tight. European, Baltic Sea and Black Sea export prices were unchanged as market activity remained low. Most players are now back in the market following public holidays across Europe and Russia, and trading is likely to pick up further.
US
US Group I and II domestic markets are balanced, while Group III 4cSt remains tight. Group II length adds downward spot price pressure for Group I and II, resulting in ICIS prices easing off 2021 highs. However, most domestic customers have term contracts and are seeing stable pricing as posted prices have not changed. In contrast to domestic markets, spot export markets are seeing significant downward price pressure that has continued into January after typical year-end inventory clearing. Some producers continue to target export markets to manage Group II length and have to offer competitive pricing. Feedstock vacuum gasoil prices surged nearly to 2021 highs, which pressured margins.
Asia
Asian Group I base oils spot prices were stable to soft amid muted talks, depending on the grade. Demand stayed suppressed amid global economic woes and sellers were reluctant to reduce prices further in the wake of rising energy costs. Group II base oils spot prices were also stable to soft. Buying interest for Group II heavy grade material in some regions such as China increased. This was partly due to improved
demand for downstream automotive lubricants in preparation for the Lunar New Year mass migration when people return to their hometowns. Group III prices remained unchanged in a thinly discussed market for South Korean cargoes.
Middle East
Middle East base oils prices were stable to soft in mid-November, with the market generally well supplied.
Downstream finished product demand remained generally sluggish, and this is expected to be the general trend for the rest of the year.
Middle East base oils prices were mostly stable to soft. Prices of Group I SN500 and Group III, in the region’s main trading hub, the United Arab Emirates, were under further pressure from reduced offers by major traders and suppliers.
LINK
www.icis.com
LUBE MAGAZINE NO.167 FEBRUARY 2022
47
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