Global base oils market snapshot – Week of 20 July

Автор Iain Pocock, Editor

Price gains for some base oil grades like bright stock have outpaced other grades in response to tighter-than-expected supply and strong demand.

Bright stock prices rebounded in all the key markets as oversupply flipped to a sudden shortage. Supply fell after bright stock values slumped relative to crude and to other base oil grades. Weak margins incentivised producers to cut run rates.

Supply in markets like Europe and the Mideast Gulf has been insufficient to cover bulk cargo demand in key outlets like Egypt. Buyers in the Mideast Gulf have turned to high-priced flexibag volumes from Europe to cover requirements.

The firmer fundamentals have triggered a surge in fob Europe export bright stock prices in recent weeks. The bright stock premium to SN 500 has rebounded to its highest level in a year.

Europe bright stock rebounds versus SN 500

Europe bright stock rebounds versus SN 500

Argus Base Oils Newsletter
Sign up to the global Argus Base Oils Newsletter. This FREE twice-monthly email alert contains the latest industry news, insight and analysis, sent directly to your inbox.
Sign up

In Asia-Pacific, prices for cfr India light-grade base oils have rebounded since early June. By contrast, prices for cfr northeast Asia light-grade prices have been steadier. The rise in base oil prices in India has coincided with a surge in that country’s retail diesel prices to record-high levels.

The steadier base oil prices in northeast Asia reflected plentiful and rising production capacity of light grades in China.

The diverging fundamentals triggered a rise in cfr India N150 prices to a $75/t premium to northeast Asia prices. They had been at a $50/t discount to northeast Asia prices as recently as early May.

India’s light grade values extend recovery

India’s light grade values extend recovery

In the US, Group II light-grade prices have continued their recovery relative to Group III base oils. A large volume of surplus Group II supplies was cleared through the export market. Low refinery run rates have slowed the speed of a subsequent rise in surplus supply. Group III supply is getting a boost from a recovery in imports. Demand remains weaker because of slow passenger car engine oil demand.

Prices reflected these different fundamentals. The premium of Group III 4cst base oils to Group II N100 has narrowed to $0.85/USG, down from a three-year high of $0.99/USG in early June.

US Group III prices weaken versus Group II

US Group III prices weaken versus Group II

Argus Base Oils Virtual Forum 2020

Firmer outright prices in all the key markets have slowed or halted the recent slump in base oil prices relative to crude and diesel. The premium of domestic base oil prices to diesel remained much lower than their peak levels in April. But the premiums are now mostly above levels in 2019, especially in Europe.

Group II premium to diesel steadies

Group II premium to diesel steadies

Learn more about the Argus Base Oils service and view a sample report

Комментарии

Leave a reply

Required
Имя
Имя введено некорректно (возможно введение только букв без символов )
Фамилия
Фамилия
Комментарии

Похожие записи

07 июля 2020

Global base oils market snapshot – Week of 6 July

More balanced market fundamentals have supported an ongoing recovery in base oil prices. Supply now showed signs of tightening more than expected because of plant maintenance and refinery run cuts linked to unusually weak fuel margins.

Фильтр:

Нефтепродукты Global Africa Asia-Pacific English Europe FSU Latin America and Caribbean Middle East North America

15 июня 2020

Global base oils market snapshot – Week of 15 June

Squeezed margins, changing arbitrage spreads and firmer export prices reflect expectations that base oil prices and demand have bottomed out.

Фильтр:

Нефтепродукты Global English Asia-Pacific Europe Middle East North America

03 июня 2020

Global base oils: Margin pressures begin to build

Plant maintenance, run cuts and arbitrage exports have helped base oil producers to balance out the drop in demand over the last two months. But weakening margins reflect the still-muted strength of the recovery in demand and the market’s structural oversupply.

Фильтр:

Нефтепродукты Global English Asia-Pacific Europe Middle East North America