For the Quarter Ending September 2024
North America
In Q3 2024, the Polyalphaolefin (PAO) pricing in North America experienced a notable increase, driven by various factors influencing market dynamics. One significant aspect contributing to the rising prices was the gradual recovery in demand from key industries such as automotive, construction, and industrial applications. This uptick in demand, coupled with stable supply levels, created a conducive environment for price escalation. Additionally, the sustained high prices of key feedstocks like Propylene further propelled the upward trajectory of PAO prices in the region.
In the context of the USA, which witnessed the most significant price changes in the region, the overall trend in Q3 was characterized by a positive sentiment. Morever, the quarter-on-quarter increase of 3% indicated a strengthening pricing environment. The price comparison between the first and second half of the quarter, showing a 5% rise, highlighted a notable acceleration in price growth.
As Q3 came to a close, the latest quarter-ending price for PAO stood at USD 2700/MT of Polyalphaolefin 4cSt FOB Oklahoma in the USA, reflecting the overall positive and increasing pricing sentiment observed throughout the quarter.
APAC
In Q3 2024, the Polyalphaolefin (PAO) market in the APAC region experienced a period of declining prices, influenced by several key factors. One significant driver was the subdued demand from various industries, particularly the automotive and lubricant sectors. This weak demand created a scenario of oversupply, leading to downward pressure on prices. Additionally, supply dynamics played a role, with ample inventories and efficient production contributing to the price decrease.
Turning specifically to China, the market witnessed the most significant price changes, reflecting broader regional trends. Moreover, the quarter-on-quarter change of -4% highlighted the ongoing downward trend. A comparison between the first and second half of the quarter revealed a -2% difference, showcasing a consistent decline in prices. The latest price of USD 2640/MT for Amorphous Polyalphaolefin FOB Qingdao in China underscored the prevailing negative sentiment in the pricing environment.
Europe
In Q3 2024, the Polyalphaolefin (PAO) market in Europe experienced a fluctuation in prices, with Germany witnessing the most notable changes. The market was influenced by several key factors, including moderate demand from downstream industries, particularly automotive and industrial sectors. In the latter part of July, the price of Polyalphaolefin (PAO) in the European market experienced a 1.9% increase, driven by a surge in domestic buying activity. This price uptick was influenced by the receipt of new orders from potential customers, which contributed to a tighter supply-demand balance. The heightened interest and increased transactions in the market led to the observed rise in PAO prices during this period. Additionally, supply chain disruptions within the global economy also played a role in this price trend. Interruptions in the availability of raw materials and logistical challenges contributed to tighter supply conditions, further driving up the price of Polyalphaolefin (PAO) in the European market. Compared to the previous quarter in 2024, prices rose by 2%, reflecting a consistent upward trajectory. The second half of the quarter showed a 1% increase from the first half, demonstrating a sustained positive momentum. The quarter-ending price for Polyalphaolefins 4cSt FOB Dusseldorf in Germany stood at USD 2490/MT, highlighting the overall positive pricing environment that characterized Q3 2024 in the European PAO market.
For the Quarter Ending June 2024
North America
The price of PAO in the US market remained stable in the second quarter of 2024 due to the weak orders from the downstream lubricant sectors. Despite an improvement in the downstream automotive industry, the demand for PAO in the lubricant sector remained weak. The merchant in the US market had sufficient supply to meet the domestic requirements. During this period, balanced demand and supply chains played a crucial role in maintaining price stability. The petroleum industry, a key downstream sector, exhibited moderate demand, contributing to the equilibrium in PAO pricing.
Expected seasonal fluctuations, such as the Atlantic hurricane season, led downstream market participants to adopt cautious procurement strategies, ensuring their stockpiles were sufficiently padded against potential disruptions.
In the USA, which experienced the most pronounced price activities during this period, PAO prices remained fundamentally stable. This reflected a stable sentiment in the PAO market, indicating neither positive nor negative volatility but rather an equilibrium maintained by balanced supply-demand dynamics and prudent inventory management. Hurricane Beryl halted industrial production in the USA in June 2024, and floods further disrupted downstream demand in the petroleum industry.
APAC
In the second quarter of the year, the price of Polyalphaolefin (PAO) remained stable in the Asian market. Despite fluctuations in other chemical markets, PAO managed to maintain its pricing equilibrium, reflecting a period of relative calm. This stability can be attributed to a balance between supply and demand dynamics within the lubricant sector, where PAO is a critical component. Demand for PAO in the lubricant sector was only average during this period. Various factors contributed to this moderate demand. The automotive industry, a major consumer of PAO-based lubricants, experienced a steady but unspectacular period of activity. While there were no significant spikes in automotive production or sales, the industry maintained a consistent output, which translated into a steady but unspectacular demand for PAO. Additionally, industrial applications of lubricants saw a similar trend. The manufacturing sector, another significant user of lubricants, operated at a consistent pace without notable increases in activity that might have driven up PAO demand. At the end of quarter, the PAO 8Cst price stood at USD 4378/MT Ex-Mumbai basis.
Europe
In Q2 2024, the Polyalphaolefin (PAO) market in Europe exhibited remarkable stability, with supply and demand dynamics maintaining a fine balance. The primary factors contributing to this equilibrium included ample supply, moderate demand, and improved supply chain logistics, which collectively prevented significant price fluctuations. Additionally, subdued downstream procurement, particularly from the lubricant sector, kept the market from experiencing substantial price changes. Despite improvements in the automotive industry, the demand for PAO remained lukewarm due to economic uncertainties and high-interest rates, which dampened purchasing enthusiasm. Focusing exclusively on Germany, the market saw the maximum price changes within the region. Overall trends indicated a stable pricing environment, largely driven by the same supply-demand balance observed across Europe. Seasonality did not significantly impact market prices, as the industry's cautious approach to inventory management kept fluctuations minimal. Concluding the quarter, the PAO 4cSt FOB Dusseldorf price stood at USD 2440/MT. This stable sentiment throughout Q2 2024 reflects a generally neutral pricing environment, characterized neither by significant positivity nor negativity.
For the Quarter Ending March 2024
North America
During the initial quarter of 2024, the North American region encountered a stable to bearish market scenario for Polyalphaolefin (PAO), influenced by various factors. Notably, a decrease in fresh orders from potential customers, who were primarily managing operations based on existing stock levels, played a significant role. Moreover, disruptions in the supply chain coupled with adverse weather conditions further dampened demand conditions, contributing to a subdued market atmosphere.
The downturn in demand from the downstream lubricant manufacturing sector exacerbated the bearish market situation. However, the USA, being the primary market for PAO in the region, witnessed moderate demand despite constrained supply, attributable to regular buying activities.
The price of PAO in the USA during this quarter stood at USD 2480 per metric ton for Polyalphaolefin 4cSt on a Free on Board (FOB) basis in Oklahoma. Comparing these prices to the same quarter of the previous year revealed a percentage change of 17%. The market experienced an oversupply situation, with demand for the product primarily fulfilled by existing stock levels.
APAC
The Polyalphaolefin (PAO) market in the Asia Pacific (APAC) region-maintained stability during the first quarter of 2024. The market was influenced by various factors, including stable demand from lubricant manufacturers, a weak performance in the downstream automotive industry, and a sufficient supply of PAO in the Chinese market. In China, there was a decline in fresh orders as merchants focused on managing their operations based on existing stock levels. This resulted in a decrease in the operating rate of domestic PAO enterprises, although the industry equipment load remained sufficient. It is expected that restocking will take place in the following months of the year. Thankfully, no plant shutdowns were reported during this quarter. Overall, the APAC PAO market remained stable during the first quarter of 2024, with China playing a crucial role in the pricing dynamics. The market was affected by weak demand from the downstream automotive industry, ample product availability, and merchants managing their operations based on existing stock levels. Fortunately, no plant shutdowns occurred during this period.
Europe
In the European region, Polyalphaolefin (PAO) pricing witnessed a bearish trajectory in the first quarter of 2024, primarily attributed to weak demand from downstream lubricant manufacturing industries. Despite external factors such as cost pressures and fluctuations in raw material prices, the market experienced subdued demand conditions, which effectively kept prices stable. Notably, the German market observed a decline in demand from the downstream automotive sector, resulting in reduced orders from potential customers. Additionally, fresh concerns have emerged over Germany's export industry due to trade disruptions arising from Houthi attacks on shipping in the Red Sea, introducing further destabilization. These attacks have introduced new challenges to Germany's international trade dynamics, raising uncertainties about the resilience of its export sector. Analysis of Germany's market performance in Q4 revealed a -15% change compared to the same period last year, a -2% change from the previous quarter, and a -9% change in price percentage comparison between the first and second half of the quarter. As for the current quarter, the recent price of Polyalphaolefins 4cSt Free on Board (FOB) Dusseldorf in Germany stands at USD 2486 per metric ton.
For the Quarter Ending December 2023
North America
The USA market encountered a bearish trend, primarily driven by a reduction in production costs resulting from a decline in the price of upstream crude oil. Additionally, the feedstock Ethylene experienced a notable downturn throughout the quarter, influencing the costs of Polyalphaolefins (PAO). Despite a stable supply of PAO during the quarter, demand from the downstream lubricant industry remained relatively low, resulting in a balanced market situation.
The UAW strike impacted production for three major players in the automotive sector, leading to a moderate to low supply of PAO. The USA market-maintained supply stability, and demand for PAO remained consistent from the downstream automotive and lubricant industry.
However, buyers exhibited hesitation in engaging in bulk purchases, influenced by year-end destocking sentiments among downstream and regional PAO buyers. Additionally, macroeconomic challenges, such as persistent inflationary pressure and elevated interest rates, have weakened the purchasing power of end-users. As the quarter concluded, the price of Polyalphaolefins 4cSt FOB Oklahoma in the USA was recorded at USD 2742/MT.
APAC
The Polyalphaolefins (PAO) market in the APAC region maintained a stable pricing trend during Q4 2023, characterized by slight yet significant fluctuations. This stability was primarily attributed to ample supplies of PAO in the market, low demand from the downstream industry, and the anticipated decrease in the price of essential feedstock, Ethylene. The Chinese PAO market reflected a state of stagnancy due to subdued demand within the downstream automotive and lubricant industry, coupled with low production rates contributing to a decline in prices. The overall market situation was balanced, marked by a stable supply, and limited demand from the international market. Enterprises did not encounter substantial inventory pressures, and purchasing activity remained stagnant after a marginal increase in November. Several companies reported relying on existing stocks as a cost-cutting measure, resulting in a slight decrease in input inventories. Stocks of finished goods saw a marginal increase, partly attributed to the delayed shipment of items to clients. Furthermore, muted demand towards the end of the quarter was influenced by the Christmas holiday. Notably, there were no reported plant shutdowns during this time frame. The quarter-ending price of Amorphous Polyalphaolefins FOB Qingdao in China stands at USD 2853/MT.
Europe
The Polyalphaolefins (PAO) market in Europe experienced only marginal improvement during Q4 2023, maintaining a balanced market situation with moderate supply. The three key factors influencing the market were stagnant demand from the lubricant sector, surplus availability of material, and diminished demand from the downstream industry. In Germany, the market observed a phase of stagnancy characterized by sufficient supplies and subdued demand within the automotive and lubricant industry. Despite this, there was a slight increase in prices attributed to the rising costs of critical feedstock Ethylene, escalating rates of upstream Crude Oil, and elevated energy prices. In the mid and final months, an inclining pattern was observed due to the rise in overseas market demand despite reduced domestic demand. The noticeable surge in demand, especially in the lead-up to the festive season, characterized by heightened consumer activities, including increased purchases in the automotive sector, played a significant role in driving this positive trend. During this period there were no plant shutdowns has been noticed. At the end quarter, the cost of Polyalphaolefins 4cSt in Germany was recorded at USD 2548/MT on a FOB Dusseldorf.
For the Quarter Ending September 2023
North America
In the third quarter of 2023, the Polyalphaolefin (PAO) prices in the North American market remained relatively stable, with only minor fluctuations in a narrow price range. The prices saw a slight decline in the first and last months of the quarter, but there was an increase in the second month. This decline in price can be attributed to factors such as decreased demand from the lubricant sector, a global economic slowdown, and various macroeconomic influences. Further, the downstream industry faced its own unique challenges during this period. Additionally, during September, the demand for PAO from automotive in the USA market was significantly impacted by a strike organized by the United Auto Workers (UAW) union, which had a substantial effect on production for three major market players. As per reports from various market participants, the ongoing UAW strike is expected to further reduce the demand for PAO within the USA market. However, in August, the PAO prices saw a marginal increase of 0.9% on the back rise in the upstream Ethylene values this month, and market players experienced supply tightness in the market with an increase in the crude oil futures globally.
APAC
In the Asian Amorphous PAO market, there was an initial decline in the first month of the current quarter, followed by a significant and noteworthy increase throughout the quarter. In July, prices dropped due to reduced demand from the lubricant industry and a decrease in the cost of upstream Ethylene in the regional market. However, international supplies were readily available at lower import prices, partly due to the favorable performance of the Chinese Yuan against the US dollar. The resumption of production in China increased product availability, leading market players to make sales with narrow profit margins and gradually regain market momentum, even as inventory levels remained high. Conversely, prices experienced a substantial increase in August 2023, and this upward trend continued through September. This price surge was primarily driven by a tight supply situation within the country, rising upstream crude oil prices, and strong demand from the international market, particularly from India, thanks to the robust performance of the downstream automotive sector. In September, labor shortages were observed, with many production units operating at reduced capacity due to mid-autumn holidays in the country. The combination of these factors widened the gap between demand and supply, further supporting the price increase. Moreover, data released by the National Bureau of Labor and Statistics indicated that the new order index remained relatively stable, with a marginal increase from 50.2 in August 2023 to 50.5 in September 2023, suggesting a consistent level of consumption of goods.
Europe
The European PAO market had an overall positive price trend during the first two months of the third quarter. Conversely, in September 2023, prices experienced a significant decline of 25.7%. The earlier price increase was attributed to a combination of factors. Several market players reported product shortages due to reduced production rates in the German market. Additionally, price hikes were the result of product unavailability and an increased demand for exports to China, alongside a recovery in the automotive sector in the regional market. According to suppliers, the recent price increases in PAO were driven by supply bottlenecks, decreased production rates, and insufficient inventories to meet the growing global and regional market demand. However, during September, the shortage of PAO appeared to be easing, and prices surged to new heights. Nevertheless, according to market sources, prices started to return to their normal values after reaching these elevated levels in early September 2023. The market situation remained stable in terms of demand, with a modest resurgence in demand for PAO observed from the downstream lubricant and automotive industries during the current week. International market demand, however, remained subdued.
For the Quarter Ending June 2023
North America
During the second quarter of 2023, the prices of PAO experienced an overall stable trend with a narrow-range change in the prices, governed by the sluggish demand within the automotive sector of the region. The challenging global economic conditions and various macroeconomic factors further contributed to decreased sales and profits for PAO producers during this period. Additionally, the downstream industry faced its own set of challenges in the first half of the quarter, grappling with disruptions in the supply chain and inflationary pressures. Major PAO producers encountered production issues. Nevertheless, the demand for PAO remained subdued. The Federal Reserve's decision to raise interest rates at the beginning of the quarter aimed at curbing inflation in the United States played a significant role in dampening demand as well. These restrictive financial conditions and inflationary pressures negatively impacted consumer purchasing power across various sectors, ultimately influencing the discussion around PAO prices in the US market. In addition, the final change in the PAO price trend has also resulted from the ease in the upstream Ethylene prices this quarter.
APAC
During the second quarter of 2023, the Asia-Pacific (APAC) market experienced narrow-range changes in the PAO prices, according to the latest data. The automotive sector in the region was facing lackluster demand, leading to concerns among market participants. The economic situation in China remained sluggish, dampening consumer enthusiasm in the domestic market, while slow offshore trading activities further contributed to the downward movement of PAO prices. Several factors influenced the price Stagnancy of PAO during this quarter, as the volatility in upstream crude oil prices and the lower availability of feedstock played a significant role. As a response to the bearish market conditions in the second half of the quarter, manufacturers decided to reduce their production run rates impacting ahead the prices by lowering the stockpiling of the inventories for the commodity. In the first half of the second quarter, the downstream processing industry also suffered a setback after the Holiday season, exacerbating the overall market situation. Additionally, the export demand decreased, and rising interest rates impacted the automotive sector's offtakes across the region. Traders faced an oversupplied market since the Labor Day Holidays in May 2023, which was further compounded by the drop in crude oil costs and feedstock prices. Overall, the combination of weak demand, external economic factors, and oversupply in the market resulted in a downward trend in PAO prices for the quarter ending June 2023 in the APAC region.
Europe
Durig the second quarter of 2023, PAO prices experienced an overall stagnancy in Europe due to the reduced demand in the downstream automotive sector and the high level of inventories. The automotive sector faced a significant drop in offers, while ample inventories were available due to rising interest rates, which constrained consumer spending over the entire quarter. In response to the challenging financial environment, market players closely monitored the situation and implemented various strategies to cope with the downturn. These measures included reducing production rates, optimizing costs, and ensuring a stable supply chain. Moreover, the decrease in feedstock Ethylene prices and upstream crude oil costs also played a role in supporting the overall decline of PAO prices during this period. Unfortunately, the global economic slowdown had lasting effects, including restrained investment, increased debt vulnerabilities, and funding shortages in the regional market. As a result, the demand for PAO in the downstream sector diminished significantly. By the end of June 2023, PAO prices had experienced a monthly decline of approximately 1%.
For the Quarter Ending March 2023
North America
In Q1 2023, the Polyalphaolefin market followed a steady trend with limited firmer offers and bids from the downstream lubricant industries. As there weren't any major hindrances in the supplies of Polyalphaolefins and with moderate production activities in both upstream and downstream companies, the demand/supply ratio remained stable, because of which the price growth was only marginal. During March 2023, the Polyalphaolefin price in the US was USD 2972/ton (4cSt FOB Oklahoma). As uncertainty about the cost side lingers and demand remains unresponsive to recent talks about a stabilization, sellers are cautiously optimistic due to rising export offers. The production rate among the significant manufacturing units was tepid, and plants were operated as per the consumer's demand.
Asia Pacific
This quarter, Polyalphaolefin prices remain steady with tepid trading activities and immediate purchasing activities from the consumer's end. The product's demand-to-supply ratio remained steady, supporting cost stability because of moderate production rates in both upstream and downstream businesses. Stability in the price of the base material used in the production of this product, ethylene, also contributed to the price consistency of PAO. In Feb 2023, Polyalphaolefin price in China stabilized at USD 3768/ton CFR Shanghai. However, market fundamentals improved in March 2023 due to an incline in demand from downstream textiles and paper industries as well as an increase in export orders from downstream companies in India.
Europe
In Q1 2023, Polyalphaolefin prices stabilized at the lower end amid limited trading activities and lackluster downstream lubricant industries. With supply exceeding demand and slower-than-expected trading activities in the region, the producers kept the prices stable. The exports of PAO from Germany to other European regions traded moderately, and suppliers in the region purchased the product on a need-to basis. The European domestic Polyalphaolefin market continues to drag the purchasing fundamentals of the market from the end users' perspective. A weak benchmark future market also contributed to the downward trend of Polyalphaolefin prices with a weak demand outlook.
For the Quarter Ending December 2022
North America
The prices of Polyalphaolefin (PAO) in the US market declined during the fourth quarter of 2022 as reflective of the decreasing price trend of upstream Ethylene in the domestic market. The poor demand from the downstream automotive sector abetted the easing price trend of PAO in the American market. The increased production rates of feedstock in the American market to meet European demand, along with reduced exports rates through freeport owing to maintenance work, led to a rise in the availability of natural gas in the US market and eventually eased the operation costs in PAO manufacturers during Q4 2022 abetting the US PAO price trend.
APAC
The poor performance of the downstream automobile in the Chinese market throughout the fourth quarter of 2022 drove down the prices of Polyalphaolefin (PAO) in China during the entire Q4 of 2022. The price of upstream Ethylene was relatively stable in China throughout Q4 2022, but the poor demand caused by the weak economic situation and rising covid-19 restrictions was the primary reason behind the weakening price trend in the Chinese market. PAO prices in the Indian market followed a very similar trend to that of Chinese PAO prices. The downstream automotive performance in the Indian market was comparatively better than various markets but still was not able to raise the price trend of PAO in India during Q4 2022.
Europe
Polyalphaolefin prices in the European region rose slightly during the first half of the fourth quarter of 2022 due to high energy prices and rising feedstock natural gas costs. Despite the poor performance of the downstream automotive sector in the European region during Q4 2022, the rising operation cost drove up the prices during the first half of Q4 2022. However, the inventory of feedstock natural gas in Europe was strong, and the demand for heating purposes was not as high as expected during the start of December, leading to the easing of natural gas and ultimately easing to operation cost of PAO during the second half of Q4 2022. Poor demand and easing operation costs led to reducing prices of PAO in Europe during the end of Q4 2022.
For the Quarter Ending September 2022
North America
The prices of Polyalphaolefin (PAO) in the American market decreased during the start of the third quarter of 2022 due to the declining performance of the automotive sector in the US. The declining demand for feedstock Ethylene in the US market abetted the declining trend of PAO at the start of Q3 2022. The trend of PAO prices in the US took a turn during the second half of Q3 2022 as demand for feedstock in the US started to rise with the improving performance of the downstream automotive sector. The price of PAO in the US during the end of Q3 was recorded at around USD 3732/MT.
APAC
The prices of Polyalphaolefin (PAO) in China increased throughout the third quarter with slight increases on a monthly basis. Despite easing ethylene costs and poor demand from the downstream automotive sector, PAO prices increased during Q3 2022 due to steady demand from the EV sector in China. The decreasing price trend of ethylene during the start of Q3 2022 in the Indian market abetted the price rise. However, the rising price of feedstock ethylene in the domestic market caused PAO prices to rise during the second half of 2022 in India. The price of PAO during the end of Q3 was recorded at around USD 4152/MT in China.
Europe
The price of Polyalphaolefin (PAO) has been steadily decreasing throughout the third quarter of 2022 on the back of the poor performance of the downstream automotive sector in the continent. The Ethylene price in the Europe region was dull throughout the third quarter of 2022, which abetted the declining price trend of PAO throughout Q3 in Europe. Due to high energy prices, the operation rates of the downstream Automotive sector in several European countries were low, declining the demand for the PAO in the European countries during Q3 2022. The price of PAO at the end of Q3 2022 in Germany was recorded at around USD 3336/MT.
For the Quarter Ending June 2022
North America
Prices of Poly Alpha Olefin (PAO) in the American market have gradually risen throughout the second quarter of 2022. The cost of PAO drove up along with the rising production in the downstream automotive sector. The American automotive industry overcame the chip shortage by the end of the first quarter of 2022 and improved production, resulting in raised demand for PAO during Q2 2022. The rising price of upstream ethylene in the US market abetted the uprising trend of PAO in the American market. The rise in ethylene price was due to increased crude oil costs in the domestic market due to the supply disruption caused by the ongoing conflict in the East European region.
APAC
In the Indian market, the price of Poly Alpha Olefin (PAO) witnessed a surge. The production in the downstream automotive sector in India improved steadily in the second quarter, influencing the trend of PAO prices in the Indian market. During China's second quarter of 2022, the PAO price trend rose during the second quarter of 2022. The increased production in the downstream automobile sector, especially the hike in Electric Vehicle sales in China, increased PAO demand and price in Q2 2022. Electric vehicle sales and production in China rose tremendously, especially during Q2, significantly contributing to the demand increase for PAO in the Chinese market.
Europe
The price of Poly Alpha Olefin PAO in the European market dropped till mid-Q2 2022 due to the poor performance and production of the downstream Automotive industry. From the end of the second quarter of 2022, the PAO prices started to increase despite the poor performance of the downstream automotive industry on the back of high upstream ethylene prices in the domestic market. The poor production in the automotive sector in the continent is primarily due to the ongoing energy crisis caused by massive supply disruptions of Natural Gas in Europe. The price of PAO in the German market during the end of Q2 saw a significant hike as the continent is eyeing to improve its Electric vehicle production.
For the Quarter Ending March 2022
North America
Prices of Polyalphaolefin (PAO) in the American market stayed buoyant throughout the first quarter of 2022. ExxonMobil oil refinery recently experienced a fire accident in late December 2021 leading to higher prices of upstream Ethylene. The downstream automotive industry in the US especially the EV sector is booming and abetting the rising price trend of PAO in the US market. Unlike other regions, the American automotive industry recovered from the chip shortage in mid Q1 of 2022 which boosted the production of automotive and led to higher PAO prices. Prices of PAO in the US market at the end of first quarter of 2022 were assessed at USD 3260/MT in March.
Asia Pacific
The prices of Polyalphaolefin (PAO) in the Indian market dropped in the Q1 of 2022, as the production in the downstream automotive industry was halted due to high shortages of circuit chips. Weak sentiments in the automotive sector reduced the demand for PAO gradually lowering its prices. The prices rose by March as the automotive sector made a slight comeback and was recorded at USD 4885/MT in the end of Q1 2022. The Chinese automotive industry didn’t get afected by the lockdowns in January and was able to meet the needs of its regional market and it had stabilized the price trend for Q1 2022. Prices of PAO in China were recorded at USD 3515/MT during March of 2022.
Europe
Polyalphaolefin (PAO) in Europe was one of the commodities which witnessed one of the most underwhelming performances in the first quarter of 2022. The downstream automotive sector had very poor productions owing to the energy shortages and transportation disruption caused by high energy prices on the account of ongoing war between Russia and Ukraine. The war even caused disturbances and difficulties in the imports of the upstream ethylene which further led to the downward trend of PAO prices. At the end of the Q1 of 2022 the prices of PAO dropped up to USD 4170/MT in the German market in March.
For the Quarter Ending December 2021
North America
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.
Asia
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.
Europe
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
North America
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.
Asia Pacific
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.
Europe
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.
