01 October 2012 07:13 [Source: ICIS news]
The prices across all grades of Group III base oils fell by $380-410/tonne (€296.40-319.80/tonne) to $1,000-1,050/tonne FOB (free on board) northeast (NE) Asia on 1 October as compared with $1,380-1,460/tonne FOB NE Asia a year ago, according to ICIS data.
Global macroeconomic woes has resulted in credit tightening in many affluent countries and curbed consumers’ buying interest for high-end luxury vehicles that demand premium engine oils and lubricants, market sources said.
Manufacturers of such high-end luxury vehicles has also cut production as global consumers remained cautious in anticipation for an impending recession.
This impacted on the Group III base oil sector, which primarily caters to producing premium engine oils and lubricants. Other uses are process oils in cosmetics and food preservation applications but these constitute only 10% of all base oil uses, a
“The current market is very bad, I have never seen prices of Group I, II and III base oils traded at almost the same prices for a long time,” a
“Excess supply amid weak demand also fuelled downward price pressure on Group III [base oil] prices this year,” a second blender noted.
The 400,000 tonne/year Group III base oil plant in Bahrain, operated by Finland’s Neste Oil, and the 500,000 tonne/year Group III base oil plant in Ulsan, a joint venture of South Korea’s SK Lubricants and Japanese refiner JX Nippon Oil & Energy, have added excess to the Group III base oil supply that the Asian market currently requires, a second Singapore trader added. The two plants were started up in 2011 and 2012 respectively.
The total capacity of Group III base oils in
($1 = €0.78)
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