03 August 2012 20:36 [Source: ICIS news]
HOUSTON (ICIS)--US base oil exports are sidelined because of the slowing global economy, buyers and shipping sources said on Friday.
“It is tough to find buyers right now,” one source said.
“The arbitrage window is open, but it is just not wide enough to take a chance,” another source added.
The arbitrage factors between Asia and the US are open following steep price reductions on Group II and III base oils in the Asia Pacific supply region.
Buyers in the US have little need to bring in material from Asia because of the lack of exports from the US itself.
Sidelined US exports are keeping domestic production in line to meet domestic consumption, with some supply length developing in several grades because of this situation.
Typical importing regions for US base oils include Mexico and South America, but sources said these regional economies are flat, with minimal appetite to receive export tonnage in August.
US base oil producers implemented double-digit decreases to posted prices in July in efforts to mitigate stagnated export demand.
Price reductions at 30-45 cents/gal were among the decreases issued by Group II suppliers, while Group III and Group I reductions were mostly at 29-35 cents/gal in July.
Posted price reductions put the lowest Group II 100 grade viscosity base oil at $4.09/gal and pushed the export assessment to $3.80-3.95/gal.
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