Base Oil Report
The European base oil markets did not deviate this year from the traditional summer trend, namely subdued activity resulting from companies taking holiday breaks.
This operational hiatus is seen most commonly among base oil consumers and is particularly prevalent in late July and the first half of August, although at the time of writing demand had not yet begun to pick up as August drew to a close.
Prices in the Group I domestic market and the Russian and new independent states (NIS) export markets via the Black and Baltic Seas came under pressure amid low demand and ample supplies.
Unusually, prices in the European export market remained unchanged. Demand was low and very few arbitrage opportunities were open. However, refiners have appeared to be under very little pressure to sell and to shift product, and resisted offering discounts.
The result was a stalemate in which the prices being quoted by refiners were simply not workable to most destinations, but equally refiners had no real need
to push through deals because supplies were not overflowing.
Refiners appeared to have anticipated the decline in demand and to have adjusted their outputs accordingly.
Nevertheless, domestic availability was very good and there were rumours of bulk volumes being sold to European customers at prices closer to the published export ranges than to the domestic ranges.
Domestic prices came under renewed pressure in August as feedstock vacuum gasoil prices decreased substantially, greatly increasing production margins, although this was countered to some extent by the weakening euro against the dollar, which lent support to prices in Euros.
The Baltic Sea and Black Sea markets had previously been tight because of widespread maintenance turnarounds at Russian refineries and the Russian agricultural season that greater increases Russian domestic consumption.
In the wake of this, availability greatly increased, yet with the Crimean port of Feodosia being unavailable for political
reasons, much of this volume found its way to the Baltic Sea instead of the Black Sea.
With EU duties on Russian imports having increased in 2014, traders have faced a bigger challenge in successfully bringing material from the Baltics into Europe at workable prices. This reduced competitiveness and growing supplies, combined with poor demand the key Nigerian market, has begun to put increasing pressure on Baltic prices.
Demand for Group III base oils suffered greatly in August, with some estimates putting sales at a third lower than July. Regardless, prices have not decreased, and sellers said they are confident of buoyant demand in September.
Ross Yeo Senior Editor Manager (Europe) ICIS
LINK
www.icis.com
Q8Oils completes £80,000 investment at its Leeds blending plant
To cater for increasing product demand and changes to its European manufacturing strategy, Q8Oils has recently completed an £80,000 investment at its lubricants blending plant in Leeds.
The work included tank conversions and new calibration equipment to increase flexibility in its bulk storage and provide additional capacity. To improve lead times and increase throughput, Q8Oils also took the opportunity to add a new filling line.
One factor that led to the investment was Q8Oils’ decision to switch from importing base oils and additives from the continent, to bulk finished lubricants from its sister plant in Antwerp, Belgium.
Q8Oils sales director Gianluca Fenaroli said: “Europe is a core market for Q8Oils and we want to continue to increase our market share by providing high levels of service and quality products to our customers. The UK is key to this growth strategy, particularly at a time when it is emerging from the economic downturn faster than most of Europe.”
This growth strategy has also included an increase in its sales organisation. Last April, Q8Oils recruited an energy specialist to increase market share within the energy sector, and earlier this month an additional direct sales manager was appointed to drive growth within the metal manufacturing and automotive sectors.
Mick Doxford, Q8Oils regional sales manager UK & Ireland commented: “Q8Oils continues to invest in its product portfolio and added value sales propositions to maintain its reputation for superior performance and increase its share of the UK market. This is demonstrated by our success at two of the UK’s largest manufacturing exhibitions, MACH and SUBCON, where we launched several new products and value added services to help our customers improve productivity and profitability.”
LINK
www.Q8Oils.co.uk
LUBE MAGAZINE NO.123 OCTOBER 2014
59
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