US base oil market remains tight on reduced production

21 April 2010 19:05  [Source: ICIS news]

HOUSTON (ICIS news)--The US paraffinic base oil spot market remains tight in the US, primarily because of  reduced operating rates and production woes, sources said on Wednesday.

The reduced operating rates stemmed from weak demand for fuel products earlier this year, which resulted in less vacuum gas oil (VGO) feedstock for base oil production.

Another supply constraint was various planned maintenance turnarounds.

Calumet was in a two-week planned turnaround at its Shreveport refinery in Louisiana. The facility was restarting this week, with first production run scheduled for Friday, the company said.

Calumet’s Shreveport plant could produce around 4,800 bbl/day of Group I base oils, 7,000 bbl/day of Group II base oils and 100 bbl/day of naphthenic base oils.

Ergon shut its Newell refinery in West Virginia on 11 April for scheduled maintenance. All the units would be restarted by mid May, the company said.  Ergon’s Newell plant could produce 1,900 bbl/day of Group I base oils, and 2,900 bbl/day of Group II base oils.

Buyers said that Group I seller Holly was tight on heavy grades, and virtually out of the spot market for the month.

“Export spot transactions from the US Gulf are mostly limited as inventories are very low,” a seller said. “And what is available is quickly being absorbed into the domestic market.”

In addition, customers are gearing up for the closure of Shell Montreal’s base oil production in June and looking to secure contractual volumes, the seller added.

Availability could remain tight in the US until the second half of the year, buyers and sellers said.

To discuss issues facing the chemical industry go to ICIS connect

($1 = €0.74)

By: Heather McGuire Doyle
+1 713 525 2653

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