For the Quarter Ending September 2024
North America
Throughout Q3 2024, the North American Base Oil market exhibited stability, with prices remaining relatively unchanged. Though prices remained stable initially, base oil demand saw an uptick in July, prompting suppliers to tap into their backup reserves. A key driver of stability was the balanced-to-tight supply conditions across most base stock categories as production levels were keeping pace with the current demand which prevented any major price spikes during this timeframe.
Moreover, inventory building in anticipation of hurricane season and unexpected production outages contributed to a tight supply situation for base oils in July. However, after witnessing immense stability, the US base oil market witnessed a marginal decline in prices in September 2024, primarily driven by lower demand from the downstream lubricants market. This price reduction was initiated by Motiva, followed by similar moves from other suppliers like Excel Paralubes, SK Enmove, Chevron, and Calumet declined the trend.
The overall trend in the third quarter remained stable, reflecting a resilient market amidst various challenges. As Q3 ended, the price of Base Oil Group I SN 150 FOB Texas in the USA stood at USD 17013/MT, underscoring the prevailing stability in the market.
APAC
The third quarter of 2024 for Base Oil in the APAC region has been characterized by decreasing prices, influenced by several key factors. Market dynamics were primarily impacted by oversupply conditions, as production rates remained high while demand softened from the downstream lubricant industry due to the off-season. This imbalance led to a surplus of base oils, putting downward pressure on prices. Seasonal patterns also played a role, with reduced buying activity due to the monsoon season affecting demand. Additionally, logistical challenges such as port congestion made imported base oil less appealing, further contributing to the decline in prices. Additionally, local base oils were more affordable than imports, allowing domestic consumers to meet many of their needs. This resulted in a cautious stance from purchasers, which in turn reduced demand for additional base oil cargoes. The overall trend in the Singapore region mirrored the negative sentiment, with prices declining by 1% compared to the previous quarter in 2024. The quarter-ending price for Base Oil I SN 150 Ex Jurong in Singapore stood at USD 873/MT, reflecting the prevailing downward pricing environment in the region.
Europe
The third quarter of 2024 in the European Base Oil market has been characterized by stability in prices. While base oil prices in Europe including the Netherlands remained stable during July 2024, the overall market remained surprisingly high for this time of year due to ongoing supply constraints. High shipping costs resulting from the Hamburg port strike and the Red Sea issues, particularly for exports to Europe face a significant lack of API Group I base oils. The European base oil market in the Netherlands has entered a period of relative calm, with prices holding steady amid a backdrop of seasonal slowdown and improving supply conditions. The traditional summer lull has seen a decline in market activity as industry participants take advantage of the holiday period to recharge. While the conflicts have disrupted supply chains and forced some businesses to adapt their operations, the market has shown resilience in September. The quarter has seen a balanced supply-demand dynamic, with restored supplies and lower feedstock Crude oil costs during September contributing to the overall stability. Ending the quarter at USD 1061/MT for Base Oil I SN 150 FD in Rotterdam, Netherlands, the market has maintained a consistent stable sentiment throughout the period.
MEA
The Base Oil market in the MEA region for Q3 2024 has been characterized by stability, with prices admitted to an uptrend during July. Supply constraints due to ongoing shipping issues and disruptions in traditional shipping routes have played a significant role in maintaining a hike during July 2024. High feedstock Crude oil costs, logistical challenges, and strong demand for finished lubricants have also contributed to the bullish pricing environment in the region. Fewer vessels were willing to operate in the Red Sea due to safety risks. This shortage drives up shipping costs for those who venture into the region. However, a deceleration in summer slowdown during August offset the uptrend trend and maintained stability during this period. In Saudi Arabia specifically, the 18% increase from the same quarter last year indicates a positive trend in pricing, while the 5% increase from the previous quarter underscores the continued stability in the market. The quarter-ending price of USD 1735/MT for Base Oil Group-III 4cSt FOB Dammam in Saudi Arabia reflects the overall stable sentiment in the market during Q3 2024.
For the Quarter Ending June 2024
North America
Q2 2024 has been a dynamic period for Base Oil pricing in the North American region, characterized by a significant upward trajectory. The primary driver has been the consistent rise in crude oil prices, which serve as the feedstock for Base Oil production. Concurrently, global geopolitical tensions and resultant supply chain disruptions have exacerbated the situation, pushing up production costs. Refiners have also prioritized Base Oil output in response to competitive pressures from other fuels, leading to a 30% year-over-year surge in production.
During April 2024, several refiners including Safety Kleen and Avista Oil disclosed new markups in the paraffinic market, while Ergon, Process Oils, and San Joaquin Refining declared price hikes in the naphthenic market. ExxonMobil, HollyFrontier, Calumet, Motiva, and Paulsboro also announced the same to encounter the profit margins which resulted in a bullish market trend.
Seasonality played a crucial role, with participants stockpiling inventories ahead of the hurricane season and the summer driving surge. This proactive behavior indicated strong future demand, further solidifying the price rise. From the previous quarter in 2024, prices rose by 8%, reflecting a consistent upward momentum. Concluding this quarter, the price of Base Oil Group I SN 150 FOB Texas stood at USD 1715/MT, signifying a positive pricing environment.
APAC
In Q2 2024, the Base Oil market in the APAC region experienced a notable upward trajectory in pricing, influenced by several critical factors. Firstly, supply constraints due to maintenance shutdowns and operational disruptions in key production facilities significantly tightened the market. Secondly, heightened demand from downstream industries, particularly automotive and manufacturing, compounded the supply shortages, leading to increased competition and bid prices among buyers. Moreover, geopolitical tensions and logistical challenges further exacerbated the supply-demand imbalance, contributing to the bullish pricing environment. Focusing on China, which has witnessed the most substantial price changes, the overall market trend has been markedly positive. This, coupled with a shift towards more cautious purchasing behavior which sustained the upward price momentum. From the previous quarter in 2024, prices increased by 2%, indicating a steady climb throughout the year. The quarter concluded with the price of Base Oil l SN 150 FOB Qingdao standing at USD 810/MT. This increment in prices highlights a generally positive pricing environment, driven by robust demand and constrained supply.
Europe
Germany, experiencing the most pronounced price changes during the second quarter, from bearishness toward bullishness. While the overall trend was upward, the market also saw stabilization factors, including increased imports and local production resumption. In April 2024, Base oil activities remained muted due to the Easter holidays. Coinciding with the Ramadan festivities, many businesses across Europe opted to close their doors. This led to a significant decrease in trading activity, which declined the trend. However, during May 2024, the price trajectory in Germany reflected a combination of heightened operational costs and supply shortages. Seasonal shifts, such as the summer driving season, increased demand for lubricants, further influencing high prices during June 2024. Comparatively, prices in Q2 2024 were down by 1% from the same quarter last year, indicative of the market's slight contraction. However, within Q2, the second half saw a 6% price increase compared to the first half, driven by tightening supply and rising operational costs. Overall, the pricing environment in Q2 2024 was predominantly positive, characterized by supply constraints, increased logistics costs, and seasonal demand spikes, which collectively fostered a landscape of escalating prices despite some stabilizing influences.
MEA
The second quarter of 2024 has witnessed a pronounced increase in Base Oil prices across the Middle East region. This incline was driven by a confluence of factors, including a rising of freight rates, a supply shortage post-Ramadan amidst halted cargos and an overall rising demand arising from economic uncertainties and geopolitical tensions. The Saudi Arabia, in particular, experienced the most significant price adjustments. Post-Ramadan resurgence, base oil trading activity has picked up across the Middle East, particularly after the Eid al-Fitr holiday. This traditional buying period sees lubricant blenders replenish stocks to meet the growing rises in finished lubricant sales during April. Buyers were willing to pay more to secure the base oil they needed to meet lubricant production demands. Moreover, Luberef, a major player in the region has faced challenges securing vessels, impacting deliveries of Group I and II base oils typically sourced from Yanbu and Jeddah. Meanwhile, Base oil supplies remained under pressure in Saudi Arabia due to the ongoing shipping attacks. Attacks by Houthi rebels in the Red Sea were forcing ships to take longer routes around the Cape of Good Hope, impacting delivery times and availability.
For the Quarter Ending March 2024
North America
During the first quarter of 2024, the North American Base Oil market faced various challenges. The market experienced a decrease in demand during January 2024, mainly due to seasonal fluctuations and a slowdown in industrial activity. Additionally, the supply of base oil remained moderate to high, leading to an excess inventory and market saturation. Fluctuating crude oil and feedstock prices further contributed to the downward trend in prices. The US Base Oil market was particularly affected, witnessing a 2% decrease in pricing compared to the previous quarter.
However, the second half of the quarter saw a significant increase in prices in the US market, with a price percentage comparison of 9%. This increase can be attributed to the disruptions caused by the shutdowns and resulting supply constraints. These shutdowns added to the existing challenges faced by the market, which was already dealing with a bullish market trend of moderate demand and constraint supply.
To summarize, the first quarter of 2024 presented challenges for the North American Base Oil market, including reduced demand, market saturation, price revision, and disruptions caused by shutdowns.
Europe
The Base Oil market in Europe experienced a subdued performance throughout the first quarter of 2024 due to various factors. One of the primary reasons for this was the lack of demand for lubricants in industries such as process, industrial, and automotive oils. As a result, the market remained balanced with moderate to low demand and low to moderate supply. The market was also affected by logistics issues, particularly delays in the transit of Base oil cargoes through the Suez Canal and the Red Sea which dampened the enthusiasm and buyers were shifting away from long-term contracts, preferring spot purchases. Among European countries, Germany witnessed the most significant changes in Base oil prices in the first quarter. Prices experienced an 8% decrease compared to the previous quarter. The prices were sustained to some extent by positive crude oil values. At the end of the quarter, the latest price for Base Oil I SN 150 FD Hamburg in Germany was recorded at USD 1033/MT during March 2024.
APAC
The APAC region's Base Oil market experienced a relatively stable Q1 2024, with a few factors that impacted the market dynamics. Firstly, the consumption of most Base Oil grades softened, leading to a surplus in the market during January 2024. Secondly, the high freight rates and increased cost of freight due to bottlenecks in the supply chain increased the pricing dynamics during February 2024. Lastly, the demand for Base oils and lubricants ahead of the Lunar New Year celebrations in China, which start on Feb. 10 next year, created a slight increase in demand. In China, the prices of light-grade SN1 150 Base Oil remained stable, while heavy grades continued to rise by 1.3% during the third week of March 2024 due to reduced accessibility. Moreover, Shandong Jincheng Petrochemical in Zibo, Shandong, China kept its Group II Base oils unit under Maintenance Turnaround from early March to the next announcement which further contributed to a marginal increase in prices during March. Disruptions in the supply chain and reduced accessibility also played a role in the price dynamics. Despite these challenges, the market remained relatively stable during the quarter.
MEA
During the first quarter of 2024, the Base Oil market in the MEA region experienced a stable to bullish market situation. Prices remained relatively unchanged throughout January 2024. The ongoing shipping issues and reduced sailings through the Red Sea and the Suez Canal caused significant disruptions and led to higher Base Oil prices in the UAE. Despite these transportation problems, Luberef managed to maintain regular cargo shipments to the UAE ports during January 2024. However, the market took a sharp turn during the second half of the first quarter, coinciding with the arrival of Ramadan. Shipping issues, transportation disruptions, and limited oil deliveries were the top three factors impacting the market during this period. Adding fuel to the fire were delays and cancellations of Saudi base oil cargoes from Luberef. Ports like Fujairah, Jebel Ali, Ras Al Khaimah, and Hamriyah have experienced a shortage of large deliveries. This scarcity was attributed to a lack of vessels willing to navigate the volatile Bab-al-Mandeb Strait, a crucial shipping lane connecting the Red Sea to the Indian Ocean during this timeframe.
For the Quarter Ending December 2023
North America
The North American Base Oil market in Q4 2023 witnessed significant fluctuations due to various factors. The market was impacted by a tight supply and demand balance of Group I and II grades, leading to a surge in Base Oil prices during October.
Additionally, the impact of price increments for Base Oil in the previous month showed its reflections in November, leading to several independent lubricant manufacturers increasing their product prices. The Group I segment experienced a tight spot flow situation due to reduced Base Oil output at some refineries amidst ongoing turnarounds and unplanned production issues.
However, the US Base Oil market witnessed a notable drop of 2.1% by entering in December, following Chevron and Motiva's announced price decrement. The demand for Base Oil in the downstream lubricant industry declined during December as buyers aimed to minimize year-end inventories to avoid tax implications. The Q4 2023 trend for the US Base Oil market was bullish to bearish, and the prices for Base Oil Group I SN 150 FOB Texas settled at USD 1581/MT during December.
Europe
Relatively, the Base Oil market in Europe witnessed a bullish trend in Q4 compared with Q3. Despite the demand remaining low due to seasonal slowdown, holiday closures, and high borrowing costs, the supply of Base Oil remained high due to reduced production in other regions, shifting priorities, global market dynamics, and high inventory levels during October.
However, at the beginning of November, the market was impacted by several factors, including the recent price hike by ExxonMobil in Europe that raised Group I Base oil prices to record highs, resulting in a surge in prices in Germany, Netherlands, and Belgium.
Additionally, the European Base oil market has witnessed some strange pattern of short supply for API Group I grades which has created a gap and led the blenders to choose light Group II Base oil as an alternative. Moreover, coping with the regional market dynamics increased exports from other regions helped in supplementing the European market. Henceforth, the prices of Base oil in Europe admitted to a hike in comparison to the previous quarter.
APAC
The current quarter of 2023 (Q4) for Base Oil in the APAC region has seen a mixed market situation with October and November admitted a bullish trend, while December witnessed a significant drop. The top three factors that impacted the market were moderate demand and uncertainty about the downstream lubricant market.
China's Base Oil market experienced a 2.6% increase in price for Group I SN and remained stable for Group II Base Oil during October. The demand for different grades varied differently, with Group I SN markets showing an uptick in consumption levels, while the demand for Group II Base Oil was sluggish during December. The correlation price percentage for China in Q4 was 0.5%, indicating a weak correlation between crude oil prices and Base Oil values.
However, the quarter-on-quarter percentage change was 51%, indicating a significant change in the Base Oil market. The price percentage comparison of the first and second half of the quarter was 4%, indicating a slight increase in prices in the second half. The latest price of Base Oil l SN 150 FOB Qingdao in China in Q4 is USD 804/MT.
MEA
The fourth quarter of 2023 in the Middle East region witnessed a moderate market situation for Base Oil. Several factors influenced the pricing dynamics during this period. Firstly, there was a high supply of Base Oil cargoes from various within the regional market of Saudi Arabia during October. This continuous influx of supply restricted market players in the UAE from increasing prices.
Additionally, there was concern over war risk insurance premiums being imposed on shipping lines and marine agencies, which potentially led to increased prices of Base Oil cargoes during November. Group I Base oil has become more expensive in Saudi Arabia as the export from Yanbu and Jeddah has increased and reached a new high which followed a similar increase in international prices during this timeframe.
However, December saw an opposite trend where many blenders were willing to clear inventories ahead of the New Year. Henceforth, to excess the offtake, several traders were continuously clearing up their stocks which contributed toward the downtrend to settle at USD 1410/MT Base Oil Group-III 4cSt FOB Dammam, Saudi Arabia.
For the Quarter Ending September 2023
North America
Comparatively, the Base oil market in the USA performed better in the third quarter than the previous one. During July, the Base oil prices established a bearish market sentiment amongst consumers amidst lackluster demand and adequate-to-ample supplies. Moreover, after the completion of a turnaround at Chevron's API Group II Plant at the end of July, an increase in the export of Base oil cargoes has been observed, further supporting the downtrend. However, the prices have rebounded during August, on the verge of price adjustments by key market players. As per the market players, ExxonMobil's announcement of a price rise due to rising feedstock crude oil prices, effective from August 4th, surprised some distributors. Therefore, under the influence of prevailing market sentiments, other key players, including Motiva, Chevron, Petro-Canada, Avista Oil, and Safety-Kleen, have also decided to increase the posted prices of Base oil to support the market values, which eventually tightened the supplies during August. Additionally, several production units, including Calumet Group I and HollyFrontier plant turnaround, tightened the supplies of API Group I and Group II grades during this September, which supported the uptrend.
Asia
The Base oil market in China remained sluggish in the third quarter compared to the second quarter. A declining trend has been observed in Base oil prices during July, followed by the previous month's downturn, and the religious holiday celebrated in China hampered the buying interest of downstream lubricants during July. Moreover, the cheaper imports from Russian crude oil put downward pressure on base oil manufacturing prices. Moreover, most of the refineries were operating at top rates during August, backed by the sole Group II producer in Taiwan, who was padding inventories to cover term requirements during an upcoming turnaround. Furthermore, the traders failed to attract consumers due to the seasonal slowdown along with the uncertain demand from the downstream lubricant industry. This has affected the market proportion towards the negative buying sentiments, which has resulted in showcasing the downtrend in the Chinese Base oil market. However, the prices have rebounded significantly during September, supported by a tight supply-demand balance and fluctuating feedstock crude oil prices.
Europe
Marginal improvement has been observed by the European Base oil market during the third quarter of the year compared to the previous one. However, the market sentiments remained negative during July due to the holiday celebration of Eid al-Adha, which has affected the business activities somewhat. Furthermore, the demand for Base oil continues to lag in most regions of Europe, including Germany, Belgium, and the Netherlands, impinging on Base oil sales due to the holiday season during August, which muted the trading activity for Base oil and other downstream lubricant products. Many blending operations have halted their production units, leading to a significant decrease in productivity. The quantity of finished lubricants coming off production lines reached an all-time low during August to settle the prices of Base oil at 1378 USD/tonne Group II H500 FD Hamburg, Germany. On the contrary, the German Base oil market witnessed a decent hike during September amid a shift in production as the refiners have started to divert their manufacturing units to distillates to maintain higher profit margins. As a ripple effect, the availability of Base Oil in the German market was hampered, which surged the price trend.
MEA
During the third quarter, several countries in the Middle East experienced minimal fluctuation, whereas UAE Base oil prices admitted stability during July as the market dynamics have not changed, and enough supplies to the UAE have been catering to the growing demand. However, The Base oil prices admitted a decent decline in Saudi Arabia during August amidst a slowdown in the market activity. The overall fundamentals of the Base oil market remained quiet, with several players on holiday and others waiting for the heat to subside. The cargoes of Base oil have been continuously moving but at a medium pace due to the extreme weather conditions within the Middle East Gulf region. As a ripple effect, the fundamental demand was relatively subdued, while few market players were trying to purchase cargoes of Group I and Group II Base stocks before prices started to move upward. Due to the underlying situation, the demand for the Base oil in UAE has outpaced the continuous supply from Russia, and additional Group II cargoes were prepared to export from South Korea and Singapore to cater to the augmented demand during September, which surged the prices.
For the Quarter Ending June 2023
North America
During the second quarter, the overall base oil market in the US contracted as compared to the first quarter, which was influenced by the higher interest rates. A downtrend of base oil prices in the US has been observed for another quarter due to the persistent rise in interest rates accounted by the FED has negatively affected overall demand. As per the data, the Industrial Production Total Index for the US fell from 103.1 (April) to 103 (May), causing the economic activities to be low. Despite the Memorial Day Holiday on May 29, suppliers had not met expectations due to higher inventories than the previous year. Reservoirs were ample enough to meet the demand. Regardless of simulating buying interest by offering lowered prices, acquisition remained low. Moreover, domestic companies such as Chevron and SK Enmove were reducing the prices of Group III during May. Economic uncertainties and high lubricant prices influenced the prices to decrease and settle at USD 1413 per tonne continuously Base Oil group II N 100 FOB Texas during the end of May.
Asia
During the second quarter, the overall base oil market in Asia remains to grow as compared to the first quarter, which was influenced by the disruption in the supply chain. The constant uptrend of Base Oil, considering improved domestic demands and depressed supply in the market has influenced the prices till the second week of May. As per the market sources, the quantities of cargoes from Northeast and Southeast Asia had decreased in May along with Taiwanese cargoes, affecting China's supply chain. However, increased feedstock crude oil prices and its operating cost tender the prices. Despite having a supply cut of Group I base oil from Indonesia, Thailand, and Singapore, ample stockpiles at domestic producers led the prices to drop during June. Additionally, Dalian Hengli Petrochemical was shut down till mid-June for Group II/ III Base oil in China. Likewise, the steady demand for material has influenced the prices to hover around USD 978 per tonne Base Oil II H-500-FOB China during the end of May.
Europe
During the second quarter, Europe's overall base oil market is comparatively weaker than the the first quarter. The second Quarter of 2023 has experienced an upward trend due to the rolling demand for Group II Base Oil till the second week of May 2023. As the blenders were shifting their production from Group I to Group II, a notable difference in demands was observed for finished lubricants. Some offers Group 1 limited the export from Europe and the depleted stocks of Russian Oils, which affected the overall supply chain of API Group I and Group II Base Oil. Moreover, the sluggish economic activity hampered the effective price trend of commodities. However, the traders showed negligible interest amidst ample product availability, stable the prices of Base Oil till June. Likewise, the steady supply of base oil within Europe and fluctuating crude oil market trend had influenced the prices of Base oil to remain steady during the end of June.
MEA
During the second quarter, several countries in Middle East Asia showed different pricing trends. The second quarter of Saudi Arabia has experienced a minimal decreasing trend, followed by the previous quarter. Base oil from Russia has been imported to Saudi Arabia at an alternative cheaper price after sanction from Europe for their own consumption. Additional discounts on raw materials as well as finished products were received in order to sustain their trade activities and maintain their existence in the market. Ample supplies influenced the prices to settle at 1750 Base Oil Group III 8cSt (FOB) Dammam during May. The second quarter of UAE have experienced a marginal upward trend before dropping extensively in the first quarter amid a stable demand-supply gap for the product. However, a slight increase in trading activities was observed during May as the Russian refineries were eager to sell large quantities of Base oil. Due to the temporary hold on the Turkish market, Base oil prices hardly fluctuated to settle at 1465 USD/ tonne Base oil II Light SN Ex-Dubai during April.
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.
