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European GIII base oil prices ease after 12-week rally

  • Märkte: Oil products
  • 19.04.23

European Group III base oil spot prices have eased for the first time since January with better supply availability as increased volumes from abroad target the market.

Group III spot prices in Europe ended their 12-week rally on 16 April, slipping by €10-15/t to €2,045/t, €2,055/t and €2,000t for 4cst, 6cst and 8cst, respectively. Increased supplies of fully and semi-approved grades in the market have weighed on spot prices.

Fully approved volumes remain limited, but additional trucks were offered in supplement to contracted allocations, market participants told Argus. Group III material that is considered fully approved is produced by suppliers with the Volkswagen oil quality standard VW504/507 certification. Following the lapse of these approvals for Nexbase Group III material earlier in the year, South Korean refiner SK Enmove is the sole producer.

Further, spot volumes out of the 19,300 b/d Group II and Group III base oil production through Ilboc, a joint venture between SK Enmove and Spanish producer Repsol at Cartagena, Spain were also offered to market participants in a bid to clear excess stocks ahead of scheduled maintenance in the second quarter.

Semi-approved Group III prices also faced downward price pressure, with increased offers of non-approved material from Asia-Pacific. Offer levels are at over a €200/t discount across all grades for these volumes.

Some blenders are tweaking their formulations and developing cheaper lines of finished lubricants with these volumes, further weighing on prices.

Producers from all regions are targeting the European market to take advantage of higher pricing, and the arbitrage window with the US, UAE and Asia is open. Spot prices from these locations range between $350-720/t discounts with European volumes.

But spot availability is expected to tighten from the second quarter as SK Enmove and South Korean producer S-Oil have overlapping scheduled maintenance at their refineries in Cartagena and Onsan at the end of May. Curbing supply availability will add upward price pressure to spot volumes.


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