22 August 2011 22:12 [Source: ICIS news]
HOUSTON (ICIS)--US Group I base oil supply is improving in August, but has not yet reached a balance with demand, buyers and sellers said on Monday. “It is getting better out there, but it is not yet balanced,” one supplier said.
Sources said a few domestic spot transactions were beginning to take place, but very few discounts from posted prices were being offered, underscoring a narrow move toward balanced fundamentals.
Unusually tight supply prevailed during the first half of 2011, caused by a rash of planned and unplanned plant outages and surprisingly stronger demand, stemming largely from recovery in automotives.
An extended downtime at one of Motiva’s base oil trains located at the company’s 40,300bbl/day Port Arthur, Texas, Group II facility pulled heavily on Group I supplies of low-viscosity grades, particularly the SN150 and 200 products, sources said.
Motiva restarted the 15,000bbl/day Group II base oil train in July, with on-spec material available to the market by 19 July after the unit went off line in May, according to buyers and other market sources, but not confirmed by Motiva.
The Motiva restart is a key factor in mitigating the supply crunch in Group I paraffinics because lower-viscosity Group I grades, especially SN150, can be used by blenders to compensate for various quantities of Group II product in a number of lubricant products.
Base oil price increases erupted in May and June as a result of tight supply and have not abated since that time.
SN150 basestock posted prices were $4.46/gal for ExxonMobil, $4.66/gal for HollyFrontier and $4.61/gal for PBF Holding, after increases of 27 cents/gal were announced by these companies in May.
Motiva announced a 55 cent/gal increase on its Group II 100/200 viscosity product in June and remains on allocation.
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