For the Quarter ending March 2022
North America
During the first quarter of 2022, prices of Base Oil increased in the North American market amid the strong demand from the downstream industries and supply constraints throughout the period. In the first half of Q1, values of Base Oil rose gradually, but after the mid-quarter, prices rose steeply due to the inflation in crude oil values in the second half of the quarter. The production cost of Base Oil witnessed because of the volatile crude oil values in the region during Q1. Base Oil discussions got settled at USD 1620 per tonne USA on FOB basis with an increment of 3% from the last quarter values at the end of Q1-2022.
Asia Pacific
Prices of Base Oil fluctuated in a stable to firm range in the Asian region during Q1. The values remained stagnant in the first half of Q1 due to low demand from the downstream lubricating segment. However, prices rose in the second half of the quarter due to increased domestic demand from the automobile sector. The manufacturing costs of Base Oil also increased due to high feed crude values throughout the quarter and supply shortages of feedstock after mid-quarter due to the war between Russia and Ukraine, which caused global supply chain disruptions. At the end of the quarter, Base Oil discussions settled at USD 1217.15 per tonne in China.
Europe
Base Oil prices fluctuated continuously in the European region in Q1, 2022, amid the consistent demand-supply constraints. Base Oil prices decreased during the first half of the quarter because of feeble demand from the downstream lubricating segment and ample material availability. The prices rebounded after mid-quarter, and the values increased in second half of the quarter after inflation in feedstock crude oil and disrupted supply chains. Sudden rise in the demand for Base Oil from the automotive sector escalated the values towards the end of the quarter. Prices of Base Oil settled at USD 1316.25 per tonne in Belgium at the end of Q1.
For the Quarter Ending December 2021
North America
Base Oil prices fluctuated during the fourth quarter of 2021 in the North American market backed by upstream Crude Oil values and demand outlook. Base Oil market sentiments remained healthy throughout the quarter due to firm offtakes from the downstream lubricating greases, motor oil and metal processing fluids manufacturers. Base Oil Group II N100 FOB Texas (USA) witnessed to attain gains in November thus, settled at USD 1360/MT. However, in December a marginal drop was seen and Base Oil Group II N100 FOB Texas prices were assessed at USD 1346/MT showcasing an overall hike since October.
Asia Pacific
In the Asia Pacific region, Base Oil market sentiments differed from country to country during the fourth quarter of 2021. In China, Base Oil prices soared in October however, eased in November and December on the back of relaxation in the freight charges as well as Upstream crude values. While in Indian market, Base Oil prices witnessed a downward trajectory in the fourth quarter due to ample inventories and stable supplies. Though, the demand from the downstream Lubricant and greases manufacturers remained stable that kept the Base Oil prices rangebound in this timeframe. In December, lull trade activities and slump in demand further exerted downward pressure on Base Oil spot prices. Thus, Base Oil Grade II H500 declined and settled around USD 1315.69/MT Ex Depot Mumbai, showing a drop of USD 70/MT since October.
Europe
In Europe, Base Oil market sentiment appeared to be bullish backed by the robust demand from the downstream industries and lower inventory levels that translated into supply tightness. Owing to the acute energy crisis across the region, lower refinery run rates led to the feedstock scarcity which consequently triggered inflation in this quarter. Moreover, delayed cargoes from Asia Pacific in effect of logistical issues because of rise in Covid 19 cases and high freight charges also supported the rise in Base Oil spot price. However, in December an ease in the prices was seen due to lower buying momentum on the back of holiday season.
For the Quarter Ending September 2021
North America
In the North American region, Base Oil prices experienced an uprise during the third quarter of 2021 baked by the scarcity of feedstock polyolefins amidst firm demand from downstream industries. The arrival of the Ida Hurricane in August resulted in the shutdown of several production plants along with petrochemical refineries. For instance, ExxonMobil and Dow were compelled to shut down their Polyolefins and Base Oil production facilities in Louisiana, USA as a repercussion which prompted a supply shortage in the region. Moreover, Cross Oil, a renowned refining and marketing company in US, also went offline in mid-September for around 2 weeks for maintenance purpose which further tightened the availability of Base Oil in North America. However, the demand from downstream sectors remained sturdy despite the constrained availability of product that aided the inflation in the pricing trend of Base Oil.
Asia
Asian market registered a downward trajectory in the prices of Base Oil due to high production rates and dampened demand from the major end-use industries in China. In Beijing, Sinopec started its Base Oil plant in July which further extended the plunging pricing trend of Base Oil in the region. Moreover, during this period, inadequate buying activities and significant interest in export was witnessed in China that compelled exporters to revise their product prices at a lower cost. An impressive demand outlook of Base Oil was observed in India after the resumption of industrial activities with full efficacy. In India, the assessed monthly average price of Base Oil in September was USD 1257.61/MT showcasing a decline of USD 29.02/MT since July owing to the ample availability of Base Oil.
Europe
During the third quarter, the European market experienced an uprise in the value of Base Oil backed by the tightened supply of PAO due to the scheduled maintenance turnaround by a key producer at its Belgium facility. Moreover, the low availability of containers led to the soaring freight cost and prolonged import time which further sent ripples to the prices of Base Oil in the region. By the end of August, Ida hurricane headed across the Gulf Coast of USA which disrupted the supply chain consequently impacting the Base Oil prices in the European market. However, the demand for Base Oil remained sturdy from the downstream sectors as it is primarily consumed in the production of lubricants including motor oil, greases, and processing fluids.
For the Quarter Ending June 2021
North America
Base Oil prices showcased sharp uptrend during this quarter in USA as under the wavering demand, material availability remained critically low across the region. Production of Base Oil was hindered after the freezing storm in the Gulf of USA in mid-February, which induced a prolonged supply shortage in the country. Major manufacturers like Holly Frontier and Calumet announced turnarounds leading to an immense production loss in the region. Moreover, Motiva and ExxonMobil Baytown also underwent unexpected turnarounds, which impacted the production of Group II Base Oil, thus supply of N600 remained critically tight. In addition, overall availability of Base Oil reduced to multidecade low in the country and ultimately prices reached USD 1488/MT for Group II Base Oil during the month of June.
Asia
Asian market encountered a firm demand for Base Oil from downstream manufacturers, amid the supply shortage across the region. Chinese market faced insufficient availability of Base Oil due to unprecedented demand leading to climb in prices of Base Oil in the country. To rectify the prolonged supply shortage in China, Sinopec planned to start its Base Oil Group II plant in Beijing in July. While in the Indian market, Base Oil prices rose consistently this quarter, showcasing rise by around 5.7% and 4.6% observed for Grade 2 H-100 and H-70 respectively, finally settling at USD 725/MT and USD 887/MT respectively during June 2021. In addition, Singapore maintained its high exports to major Asian countries including China in the meantime.
Europe
During this quarter, Europe also encountered shortage of Base Oil leading to hike in prices. This shortage was caused by critically low availability of containers and increased demand from China, which made US cargoes to be diverted towards the Asian countries rather than Europe as traders obtained better netbacks. In addition, being a highly imported commodity, soaring freight cost and prolonged extended plant shutdowns in the Gulf of USA also impacted the prices of Base Oil in major European economies. Moreover, in the initial days of April, domestic production remained low, and shortage was stretched due to lower availability of manpower amidst pandemic in the major countries
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For the Quarter Ending March 2021
Asia
The Asian Base Oil market reported a healthy increment in prices during Q1 2021, amid tight supply and significant demand. In India, Base Oil prices climbed up during January-February 2021 due to consistent tight supply activities. Later in March, resumed plant functioning and improved supply capped the price acceleration. The prices in India improved from USD 605.6 per MT (January 2021) to USD 650.5 per MT (March 2021). Meanwhile other Asian countries like Singapore increased their Base Oil prices during February amid healthy demand from downstream sectors and insufficient supply. On the other hand, IOC, a renowned Base Oil manufacturer in India, proposed its refinery expansion from 300,000 barrels per day to 500,000 barrels per day crude oil. This plant expansion is proposed to be completed by 2024 and will improve the supply crisis of Base Oil in India.
North America
The North American Base oil market faced supply fallout during Q1 2021. Winter storm during February and March forced multiple plants to face unplanned shutdowns, hence a severe shortage of Base Oil was observed across the region. These shutdowns remained in force till the end of Q1 2021 and halted the supply activities across the region which accelerated its price increase. Motiva, the largest base oil producer in the Americas announced maintenance shutdown of two key facilities - HollyFrontier and Calumet due to seasonal storms with additional downtime due to seasonal factors.
Europe
The European refineries faced slow recovery in output compared to other regions during January-February and hence the supply of Base Oil remained tight. Though the vaccine rollout enhanced the market sentiments and industrial activities saw improvement, shipment shortages halted the trade activities across the region. In addition, key market players anticipated healthy revival from COVID 19 and recovery in refining activities in forthcoming months, hence they are expecting healthy supply of Base Oil in the future.
For the Quarter Ending September 2020
Asia
Base Oil demand was stagnant due to weaker automobile growth in the North east and South East Asian countries. As the downstream automotive sector continued to perform lackluster, overall demand in Asia remained stagnant under gloomy economic conditions. Supply from South Korea remained constant as there were no major turnarounds in the country. However, imports from the Middle East remained restricted due to resumption of operations at lower refineries in China, which created ample product availability at competitive prices. Business activities which showed marked recovery during Q3 amid the news of vaccine roll-out by Q4 have created a positive sentiment in the regional market. This, backed by better prospects for crude oil helped producers in pushing pricing curve upwards. Base Oil Grade II H-100 was assessed at USD 525 per tonne, while Grade II H-70 was priced around USD 670 per tonne on CFR India basis.
North America
Despite reduced refinery run rate, light viscosity Group I oil supply was sufficient for the contract customers. The Group II Base Oil demand was especially strong in export market during Q3 largely from emerging nations such as India and Brazil. Group III supply was comfortable while suppliers were more focused on contract manufacturers created a tighter supply for spot buyers throughout the quarter. US base oil export prices gained unusually compared to the US domestic rates.
Europe
Following severe drop in the demand in Q2, amidst stalling automotive industry, a substantial recovery in the product demand was observed at the beginning of Q3. Though Group II demand was flat for most of the quarter, the demand of other base stock saw a firmed demand. Supply in September was tighter due to shortage in import from North America as an after of Hurricanes in the Gulf Coast. The demand for heavier grades was on a higher side compared to lighter grades. Output was increased by some blending units, as import disruption and maintenance is curbed by domestic supply to keep the market supported.
