INSIGHT
Samantha Wright, Senior Editor Manager
Base Oil Report
Europe European domestic Group I base oils spot prices decreased in the middle of January amid signs of minor trading revival in a well-supplied market. Healthy availability persisted in both Group I and Group II segments, with heightened competition driving offers in the market. Group III spot prices decreased slightly amid ample availability in Europe, though shipping delays could lead to tightening supply further into the first quarter. European export values were unchanged after the large dip in prices earlier in January. There was an uptick in demand though this is likely a short-term boost rather than a structural change.
US
US spot prices were flat to lower in mid-January as demand remained weak amid ample supply in the domestic market. The freeze that hit the US Gulf Coast did not cause widespread operational issues at refineries as most prepared and reduced rates as a precaution. Supplies were ample and expected to build, while demand was not expected to pick up in the domestic market. Logistics continued to be a problem for global trade, spiking rates and extending transit time. Fewer complications were seen in the US Gulf-to-South America routes than in Asia-to- Americas routes. Container rates were down from the USG to both coasts of South America, with the impact of the Red Sea issues not yet hitting all routes.
Asia
In the middle of January, Asian Group I prices were stable to firm, with bright stock the strongest grade due to sustained tight supply. Spot supply from Thailand was scarce due to an impending turnaround and a run rate cut at two units. Group II prices were mixed with lighter grades seeing softer values as ample supply was met with tepid demand. The recent losses in heavy grade 500/600N prices halted and rebounded slightly on reduced South Korean supply
and improved buying sentiment. This was partly due to some buyers substituting Group I SN500 with Group II 500/600N because of lower prices of the latter grade. Group III prices held steady on stable South Korea-origin 8cSt deals to China.
Middle East
Spot prices for Middle East base oils were mixed in mid-January. Major regional blenders who exported finished lubes to markets in Europe continued to grapple with high container freight rates and delays to planned shipments due to the Red Sea crisis, due to which ex-tank lifting was affected. The Red Sea attacks also hampered spot European Group I high viscosity index (VI) base oil exports to UAE. With issues sending material to the Middle East from Europe amid problems in the Red Sea, most European players looked to sell to Turkey, Nigeria and Egypt instead. In the absence of incoming product from Europe and from within the region, local Group I high VI ex-tank availability stayed tight, prompting a wide gap between low VI and high VI cargo prices to prevail. On the Group III front, January offers announced by a major regional seller emerged weaker tracking soft demand and ample supply, particularly on the 4cst front.
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LUBE MAGAZINE NO.179 FEBRUARY 2024
57
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