INSIGHT Base Oil Report
Samantha Wright, Senior Editor Manager
Europe European domestic spot prices surged in mid-May with firm demand and limited supply driving increases for all three Groups. Concerns about inflation have emerged on the buy-side, although tight fundamentals continued to drive a bullish market so far this month. There has been some substitution of Group II material instead of Group I but the Group II market is also constrained by high demand and limited US imports. European export values were unchanged amid very limited activity. The market has been muted by a lack of availability amid several maintenances, and as some refineries prioritised fuel production. There is still demand from west Africa, but buying interest has slowed from Turkey due to economic issues in the country.
US
US Group I and Group II prices were stable to firm in the first half of May, with several producers announcing increases on posted prices. Base oil producers face a surge in VGO feedstock costs and competition from diesel limiting their output. Spot availability has mostly vanished as a result. Refiners are meeting contractual obligations, but some continue to face delays and most are keeping a close eye on inventories. Group III prices remain stable, with better availability for Group III compared with Groups I or II.
Asia Group I and Group II prices were steady to strong in Asia in mid-May amid supported by generally higher feedstock costs and slightly tight supply of Group II material from South Korea due to production cuts and refinery turnarounds in the second quarter. Demand
for higher priced cargoes was curbed as buyers were mostly on the sidelines amid volatile upstream values. Group III prices were unchanged amid a lack of activity from South Korea.
Middle East
In the Middle East, Group I base oils prices were stable-to-soft in the first half of May, despite shortages for some light-grade material. Group II values were stable due to a lack of spot offers for any import cargoes from Asia. Group III prices firmed due to tightening availability caused by the impact of shortages of lighter Group I grades.
LINK
www.icis.com
LUBE MAGAZINE NO.169 JUNE 2022
51
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