Base oil producers bemoan current poor margins

21 February 2013 16:17  [Source: ICIS news]

LONDON (ICIS)--Poor base oil profit margins remain a concern for producers in Europe and other regions, sources said on Thursday.

Many producers have cut production rates because of unsatisfactory base oil margins.

European base oil export prices have started to rise, but margins remain under pressure because of firm upstream costs.

Speaking on the sidelines of the annual ICIS World Base Oils & Lubricants Conference in London, a Middle East producer, which stopped its base oil production in recent weeks because of poor margins, said its plant would remain down for a minimum of one month.

“There is no margin,” it said. “Today we are losing money on exports.”

Therefore, the producer, which did not want to be named, is focusing its existing supplies on its domestic market.

A central European producer said: “The margins are far away from expectations.”

It is not just producers who state that current base oil margins are unsustainable.

“If you see the vacuum gasoil (VGO) price and the crude oil price, nobody can be satisfied,” explained a European trader, referencing upstream values.

The ICIS base oil conference runs 21-22 February.

By: Carl Roache
+44 20 8652 3214

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