INSIGHT Base Oil Report Eashani Chavda, Markets Editor
Europe European domestic Group I base oils spot prices firmed in late-April, with supply limitations driving upwards pressure for May. Brightstock spot prices rose further in mid-May due to growing constraints. The impact of ENI’s shutdown at Livorno is being felt in the market, meanwhile MOL has a planned maintenance from mid to late Q2. According to sources, Repsol’s Puertollano refinery is shut down for May and June following a fire onsite in late-April. The incident led to additional demand in southern Europe.
European export prices for Group I firmed across April following increased trading activity. Prices stabilised in mid-May, though upwards pressure remains in the market. Producers continue to prioritize domestic sales, while demand from west and north Africa is increasing in Q2. Group II spot prices also rose in late-April, with market conditions balanced and prices steady in mid-May. Group III spot prices were largely steady in the first half of Q2 with supply and demand levels remaining consistent.
US Term contract customers should be largely sufficiently supplied in the US in the face of lacklustre demand as just-in-time procurement continues. Spot availability of Groups I and II is curtailed, which mostly affects the export market. This is offset by weaker demand from Latin American buyers, who are heard to be well covered on their requirements. Mexican blenders may need to restock in June, while Brazil seems well supplied locally. US refiners may be limited in what they can offer with tighter inventories on hand and hurricane season considerations. Group III availability remains ample, keeping prices steady at a low level.
Asia Group I prices held steady amid stable market fundamentals in mid-May. The demand picture remains unchanged, with most buyers remaining on the sidelines, sufficiently supplied.
Group II prices of light grade 150N as well as heavy grade 500/600N were flat across the board on limited range-bound deals. Supply of 150N lots had gradually increased, while that of 500/600N remained relatively tight. Buyers were mostly holding back on their purchases amid the recent downturn in crude and gasoil prices.
In India, average import prices of Group II 70N declined for the second straight week on the back of
weakening gasoil prices, while prices of all other Group I and II grades held steady amid thin talks. The Group I and II domestic supply shortage in recent months had alleviated to some extent, market sources said.
Group III prices were maintained the lack of deals and discussions heard for South Korea-origin cargoes.
Middle East Spot Group I base oil import prices in UAE held stable In mid-May in the absence of fresh spot offers and discussions for both low viscosity index (VI) product from Iran and high VI material from Asia, Europe and from within the region. Key Iranian producers focused on shipping volumes that were previously booked earlier this month. The continued volatility in upstream crude contributed to a cutback in ex-tank demand and lifting, paving the way for some softness in SN500 prices late in the week.
Overall base oils’ demand in UAE’s local market was also hampered by the emergence of offers of re-exports and cargoes diverted away from India, following a cutback in demand there ahead of the General elections. Supply limitations that persisted on the Group I high VI imports’ front lent support to deals and discussions for both SN150 and SN500 in the local ex-tank market.
On the Group II front, as much as 30,000 tonnes of product previously imported from Asia and the US, was said to be available as local inventory with an additional 30,000 tonnes of product set to arrive in May. This excess supply significantly weighed on demand for fresh imports from Asia, with buyers firmly resisting higher Group II offers from major producers in Asia.
Surplus Group II availability additionally weighed on buying sentiment for Group I product.
Weaker ex-tank demand weighed on late-week discussions for Group III 6cst and 8cst lots.
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LUBE MAGAZINE NO.181 JUNE 2024
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