Taiwan’s CPC-Shell Lubricant halts Mar base oil supply to China

20 March 2012 07:20  [Source: ICIS news]

SINGAPORE (ICIS)--Taiwan-based CPC-Shell Lubricant has halted its spot supply of Group I base oils to China in March, because of low profit margins from the Chinese market, a company source said on Tuesday.

The decision was made, as higher international crude prices increased production costs and reduced profit margins from Group I base oils for CPC-Shell, the source added.

The source added that demand for Group I base oils in China was not strong enough for the company to raise its prices.

CPC-Shell Lubricant had increased the price of its Group I base oils by $10-20/tonne (€7.60-15.20/tonne) because of rising production costs in February, the source said.

It increased its spot supply of SN150, SN250 and BS150 Group I base oils to China in February to 3,000-4,000 tonnes from 2,000-3,000 tonnes in January, according to the source

If it remains unable to raise its earnings from the exports of Group I base oils, CPC-Shell may consider reducing the operating rate at its Group I base oil plant and switch to producing treated distillate aromatic extract which would yield better profit margins, the source added.

The Group I base oil plant is located at Kaohsiung, Taiwan and has a capacity of 250,000 tonnes/year.

The company did not provide further details about its base oils supply for April.

By: Whitney Shi
+65 6780 4359

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