For the Quarter Ending March 2023
North America
The US Base Oil market has seen a slow demand this quarter, despite the arrival of the seasonal demand expected at this time. Uncertainty in the market and slow sales of lubricants have led to downward pressure on Base Oil prices. Raw material costs, insurance, labor, and logistics have increased, leading to price hikes for some finished products. Some producers offered temporary discounts to encourage buyers to take on more volumes, as demand was slower than in previous years. This situation was perplexing as orders typically increase in the spring. Market sources revealed that the persistent rise in interest rates by the FED had been the major driving factor for the economic slowdown.
Asia
On March 31st, it was reported that despite China's recovering demand for Base Oil, several plants were operating at reduced capacities due to decreased demand and overcapacity caused by the pandemic. This is due to strict lockdowns and mobility restrictions enforced with a stringent zero-COVID policy. On mid of the quarter, Base Oil prices fluctuated marginally, except for H 500, which continued its uptrend due to a shortage of heavy base oils. On mid of March, Asia's Base Oil prices saw a marginal increase due to improving domestic demand, although production rates remained low at around 40%. Heavy grades were in high demand, causing temporary shortages in the market, and cargoes were scheduled to China from Taiwan and South Korea to meet demand.
Europe
During the month ending January, the price of Base Oil II Light SN FD Hamburg (Germany) remained steady at USD 1395/MT, with stable demand and supply witnessed in the domestic market. However, the EU's embargo on Russian fuel imports from February 5th, 2023, led to a temporary shortage of refined products in Europe, as Russia was the largest provider of fuels in the region. China's end of COVID-19 lockdowns could not boost demand in the international market after the Lunar New Year celebrations. Base oil prices received nominal fluctuations due to usual market supply changes, with supplies remaining stable in Europe despite maintenance turnaround. European Base Oil market was experiencing low demand fundamentals throughout the quarter, leading several refiners to put their refineries on maintenance turnaround. Demand varied grade over grade, with some grades in ample supply while others remained short in the market.
For the Quarter Ending December 2022
North America
The US market did not remain unaffected by the ongoing global market imbalance and pessimistic outlook for the global petrochemical industry, which was hovering around producers’ heads. As per the data, the US Base Oil prices declined during the first month of the quarter, remained unchanged during the second, and declined in the last. The major factor behind this price trend was the competitive market, as cheaper cargoes from Iran and Russia were also pressuring the US to revise their offers for the global market. Furthermore, the demand-supply gap remained narrow enough to support this price trend in the market during this quarter, where the prices hovered around USD 1700/MT (Base Oil Group II N100 FOB Texas (USA)) and USD 2020/MT (Base Oil Group II N600 FOB Texas (USA)) during November 2022.
Asia
Asia witnessed a smooth falling trajectory for Base Oil prices during the 4th quarter of 2022. Declined crude oil value due to stringent lockdown in China after a steep rise in new COVID cases led to a consistent fall in demand for several commodities, including Base oil. As per the market sources, low demand in the international market also made prices more competitive, and traders had no choice than revising their offers after analyzing the market situation. However, by the end of the quarter, China started easing its pandemic restrictions after strikes and protests by civilians, which induced optimism among market players, and this price started heading upward. The data shows that prices of Base Oil revolved around USD 855/MT (Base Oil ll H 100-FOB Qingdao (China)) and USD 935/MT (Base Oil ll H 150-FOB Qingdao (China)) during November 2022.
Europe
The fourth quarter of 2022 remained dull for the European market in case of demand/supply and economic activities. The European government was ensuring ample inventories of natural gas in order to prevent another energy crisis in the region amidst the approaching winter season. The Base Oil price showcased a steep and consistent decline during the whole quarter under the influence of ample product availability. As per the market insights, traders were getting orders steadily, but the demand was low. Thus, selling these cargoes in the domestic market took time. Consequently, Base Oil prices kept their downtrend continuing throughout the quarter and assessed around USD 1115/MT (Base Oil I Heavy SN FD Hamburg (Germany)) and USD 1658/MT (Base Oil II Heavy SN FD Hamburg (Germany)) during November 2022.
For the Quarter Ending September 2022
North America
The Base Oil market in the North American regions witnessed moderate sentiments since the first week of August. The overall market transactions for Base Oil remained below average amidst steady demand in the domestic market, followed by a conservative attitude of the market participants regarding the volume procurement over the current inventories. The market was observing softer fundamentals besides the uncertainties regarding the hurricane season on the U.S. Gulf coast. The refiners had also increased the output for the Base Oils post prices for the International Crude Oil market plunged consistently for the second week of August amidst slower demand induced by rising inflation in the global market. In addition, the economic woes faced by India and China for numerous reasons levied a significant impact on the demand outlook, besides the persistent uncertainty hovering for a sudden rebound. Therefore, to protect the interests and netbacks, the U.S. refiners were over-stocking the Base Oil ahead of any disruption caused by the Hurricane, followed by the rising geopolitical conflict between China and Taiwan. As a ripple effect, the FOB Texas discussions for Base Oil Group-II N 100 assessed USD 1855 per tonne in July.
Asia
The Base Oil market in the Asia Pacific region plummeted during August 2022 amidst the more moderate Crude Oil and feedstock prices on a month-on-month basis, and the overall supply increased against the weakened demand outlook. The pricing competitiveness on the international stage is running on a higher level, which undermines the producer's sentiments to raise the offers. Instead, the higher frequencies of producers offer hefty discounts, ultimately leading to a significant dip in the offered quotations. However, the high freight rates and logistical issues dampened some proposed transactions, and the ongoing summer holidays in the European region affected buying interest. As a ripple effect, the FOB Qingdao discussions for Base Oil II H-100 averaged USD 1140 per tonne in July 2022.
Europe
The Base Oil prices showed a week-on-week decline of 4% in Belgium during the second half of August 2022, backed by the weak downstream demand from the lubricants segment and high inflationary pressures that diminished further buying interest amongst the overseas buyers. Moreover, the ease in the crude oil costs further caused downward pressure on the base oil values in the European region. In addition, the ample availability of stocks made enterprises make sales at reduced profit margins in the domestic market amid weak demand fundamentals. Thus, the price of Base Oil I Light SN FOB Antwerp (Belgium) was assessed at USD 1325/ton on the last week of August 2022.
For the Quarter Ending June 2022
North-America
During the second quarter of 2022, the market sentiments for Base Oil consistently maintained a persistent bullish sentiment throughout the quarter. The increase was driven by sky-ride crude oil and feedstock prices and rising energy, transportation, and labor costs. A major manufacturer increases the quotations by USD 91 per tonne during the last week of May amidst the firm demand and tight inventory level. The initiatives were fueled mainly by the tight supply, and most producers focused on meeting domestic demand. Therefore, in May, the FOB Texas discussions for Base Oil group II N100 were assessed at USD 1950 per tonne IN May 2022.
Asia Pacific
In the second quarter of 2022, the steep increment in Crude Oil prices against the snug supply situation continued to exert upward pressure on the quotations of the base Oil across the northeast Asia Pacific. In the meantime, western sanctions ensure the drop in Russian Crude value, and China is constantly taking advantage of the lower prices. The relaxation from COVID-19-related lockdowns & restrictions across China has also uplifted the market, and the costs of Crude Oil have pushed upwards amidst the surge in consumption.As a ripple effect, the FOB Qingdao discussions for Base Oil II H 500 were assessed at USD 1170 per tonne in May. The Indian players were keener besides showcasing a guarding interest in the Group I Base Oil offers. Although, several of them were reluctant to approve to the supplier's price expectations. Nevertheless, a significant player in the shipping industry informed that a cargo involving 5,000 metric tonnes of Base Oil had been imported from Thailand in late May.
Europe
In the second quarter of 2022, the European Unionfinally agreed on an embargo on Russian energy and petroleum products as a retaliatory measure after Russia started its full-scale invasion of Ukraine. In response, it has been anticipated that it took a more significant toll on the supplies of Base oil through the Baltic region in Europe. Group, I Base Oil's sales market stabilized in the past few weeks. At the same time, a field correspondent informed that Eni's Livorno Base Oil unit restarted production gradually after its declared maintenance shutdown last year. Although the continued consumption from the downstream industries has kept the bullish sentiment in the domestic market, as a ripple effect, the FOB Antwerp discussions for Base Oil S.N. settled at USD 2029.46 per tonne in June 2022.
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.
For the Quarter Ending March 2021
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.
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.
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.
