Margin squeeze reduces Asia base oil output

21 February 2008 16:27  [Source: ICIS news]

LONDON (ICIS news)--Increasing feedstock vaccum gas oil (VGO) costs on the back of surging crude values have prompted refiners to cut base oils production by as much as 20% in Asia, said a source from Thai Lube Base Oil Co on Thursday.

Speaking at the sidelines of the 12th ICIS World Base Oils Conference in London, the source said feedstock costs have increased nearly 40% in the last four months but base oils prices have only increased 5-7% during the same period.

Therefore refiners have diverted VGO to produce higher margin gas-oils and fuels rather than base oils, resulting in a nearly 20% drop in regional base oils production.

This was a major reason for the tightness seen in the base oils market, said several Asian base oils traders and blenders.

Solvent neutral grades like SN-150 and SN-500 have been tight and brightstock, another key base oil grade, has been really scarce, said a Dubai-based trader.

Asian base oils producers include Exxon Mobil, Shell, Pertamina and Thai Lube Base Oil.

The conference runs from 21-22 February in London.

By: Anu Agarwal
+65 6780 4359

< previous article(VIDEO - ICIS news Asia Lunchtime Bulletin 4 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly