Limited supply fosters US naphthenic base oil price increases

15 February 2011 23:29  [Source: ICIS news]

HOUSTON (ICIS)--US naphthenic base oil price increases emerged this month because of tightening supply caused by strong demand and a rash of maintenance turnarounds, buyers and sellers said on Tuesday.

Increases effective 1 February were announced by at least two naphthenic base oil suppliers, with 25 cents/gal ($75/tonne, €56/tonne) sought on all base oils and process oils.

These increase initiatives were followed by announcements by other naphthenic suppliers seeking to raise prices by 25 cents/gal on heavy grades and 20 cents/gal on light viscosity grades effective on 11 February and 15 February, depending upon the producer.

Current Pale 2000 heavy viscosity base oil spot prices were assessed at $3.52-3.61/gal FOB (free on board) plant.

Supply tightened on naphthenic base oils, also referred to as pale oils, when San Joaquin Refining (SJR) began a two-week scheduled turnaround on 22 January at its 8,100 bbl/day Bakersfield refinery in California. The turnaround took the crude unit and solvent extraction elements offline, impacting heavy viscosity pale oil production.

SJR confirmed start-up at the refinery effective 11 February, but said all products were tight and no material was available for export.

On 5 February, Cross Oil began a three-week turnaround at its 5,000 bbl/day naphthenic facility in Smackover, Arkansas.

Adding to these, Calumet verified it encountered outages caused by cold weather ahead of a planned turnaround that began on 13 February at its Shreveport, Louisiana, facility.

The weather outages thwarted inventory ramp-up procedures toward the planned turnaround downtime, further tightening supply, particularly on light and mid-viscosity products.

US demand from transformer oil products added to the limited supply condition.

($1 = €0.76)

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By: Judith Taylor
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