US PAO Prices Steady Amidst Sufficient Availability in the Market during April 2024
US PAO Prices Steady Amidst Sufficient Availability in the Market during April 2024

US PAO Prices Steady Amidst Sufficient Availability in the Market during April 2024

  • 07-May-2024 2:30 PM
  • Journalist: Rene Swann

In April 2024, the US market for Polyalphaolefin (PAO) remained unchanged and faced significant challenges due to oversupply and limited demand. PAO, a key component in lubricants, experienced a downturn in demand despite some improvements in the downstream automotive industry compared to February 2024. Production levels remained high, leading to a surplus of PAO. Additionally, the existing availability of PAO inventories contributed to the oversupply situation. This surplus, coupled with limited demand, created a challenging environment for PAO manufacturers and suppliers. During the last week of April, the PAO 8cSt settled at USD 2620/MT on a FOB Oklahoma basis.

While the downstream automotive industry showed signs of improvement in April, with an increase in production and sales, the demand for PAO in the lubricant sector remained bearish. The automotive industry's recovery was not uniform across all segments, with some areas still experiencing sluggish demand. The bearish demand in the lubricant sector led to a decline in fresh orders for PAO in April 2024.

Customers in the lubricant industry were cautious in placing new orders, preferring to use existing inventories to meet their immediate needs. This cautious approach further exacerbated the oversupply situation in the PAO market.

Further, manufacturing production in the US saw an increase, although the pace of growth slowed down. This slowdown was primarily due to a decrease in new orders, which led manufacturers to rely on fulfilling existing orders to maintain output levels. As a result of these factors, lead times on the delivery of purchased items are shortened. Suppliers were able to fulfill orders more quickly due to the reduced demand and sufficient stock levels, allowing manufacturers to receive their purchases in a shorter amount of time.

Looking ahead, the PAO market holds promise for growth, albeit with some uncertainty. The ongoing recovery of the automotive industry is a positive indicator, with the pace and extent of this recovery expected to play a significant role in driving future demand for PAO. Additionally, factors such as the increasing adoption of electric vehicles (EVs), evolving consumer preferences, and global economic conditions will all contribute to shaping the demand for PAO in the lubricant sector.

Moreover, a potential increase in industrial activities in the US market could further boost the demand for PAO shortly. As industries ramp up their production and operations, the need for lubricants containing PAO is likely to rise, presenting new opportunities for manufacturers and suppliers in the PAO market.

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