For the Quarter Ending December 2021
Polyalphaolefins, which constitute the Group IV base oils, experienced the highest surge in demand from the lubricant industry in comparison to Group I and II oil in the North American region, causing the market prices to escalate in quarter four of 2021. The raw material tightness and insubstantial productions at still recovering facilities post damages from the Ida hurricane in the Gulf coast of the USA supported the price rise in the USA market. The prices dwindled briefly in early December owing to the pressure-relieving efforts by the USA government opting for strategic release of the upstream crude oil inventories. However, the demand driving fundamentals from the lubricant industry eventually prevailed causing the prices in December to range between USD 2900/MT to 3100/MT FOB Oklahoma.
The Polyalphaolefin prices in the Asian market skyrocketed throughout the fourth quarter backed by strong ethylene feedstock amid soaring upstream crude oil prices in the international market. The alternate upstream source, natural gas, also remained tight during the major portion of the quarter which elevated the input costs in Japan and South Korea and also escalated the import prices in China. The spike in freight charges over container crisis at ports coupled with restrictions imposed by the Chinese government in compliance with its zero-covid policy delayed Polyalpholefin consignments in reaching the China downstream market, hence causing the prices to settle around USD 3683/MT in December. In India, the wrath of raw material tightness and surge in freight charges rose the Polyalphaolefin prices during October month. However, a cap in December prices, hovering between USD 4881/MT and USD 5291/MT, was observed on account of relief in the upstream market and dullness in downstream demand.
The frenzied upstream natural gas market, as well as low inventories of crude oil exerted astoundingly high pressure on the Polyalphaolefin market in the Europe, encouraging the manufacturers to keep their contracts on the higher side during the whole of October and till mid-November. The operational constraints due to energy shortage also supported raised prices in Germany. However, the retraction in natural gas and crude oil prices over time brought bearishness in the price trend in December. The demand from the lubricant industry projected stability, causing the Polyalphaolefin prices in Germany to settle around USD 4820/MT during December.
For the Quarter Ending September 2021
The prices of PAO witnessed a significant surge in the domestic market of North America during Q3 of 2021. Increasing energy prices in the USA had an adverse impact on the cost of production of PAO which translated into the hiked prices of PAO across the region. Leading producers were observed making substantial price hikes on the material in order to maintain the margins during the quarter. The occurrence of Hurricane Ida hamstrung the production of crude oil and natural gas which has contributed to the curtailed production of PAO along with other factors during the quarter.
The domestic market outlook of Polyalphaolefin witnessed an upward trajectory in the Asia Pacific region in the third quarter of 2021. In India, the pricing trend of PAO showcased consistent improvements in Q3. Despite dull market fundamentals, the pricing of PAO rose considerably under the international pressure across the country. CFR JNPT (India) pricing escalated from USD 3225/MT to USD 4349/MT from July to September. Global rise in the prices of raw materials further affected the PAO pricing in the Asian markets, despite of nil demand from downstream lubricant sectors. There were several other reasons behind this rise, like rising production cost due to global inflation, soaring freight costs, and shipping charges, etc.
In the European region, the demand outlook of PAO experienced an uptrend in the domestic market in Q3 2021 on the back of the consistent demand from the downstream lubricants sector. As European economies were recovering from severe effect of COVID-19, a major spike in the demand for PAO from downstream segments was observed across Europe. Furthermore, prices of PAO were assessed at more than USD 4700 per MT in the last month of Q3 2021, on the back of disrupted supply supported by limited production of PAO in Europe.