Europe Group I base oils will persist despite Group II competition

21 February 2013 17:30  [Source: ICIS news]

LONDON (ICIS)--Increasing competition with imported Group II base oils will not spell the end of Group I plants in Europe, experts said at the 17th ICIS World Base Oils conference on Thursday.

During a panel discussion on the impact Group II imports could have on Group I and III base oils in Europe, Daniel Iannuzzi, of Feedco S.A., observed that global demand for heavy viscosity Group I base oils would ensure the continued existence of European plants, for the next 5-10 years at least.

The European base oil market has historically been a Group I export market, and demand for heavier grades, often from equatorial regions of the globe, will support European production, even if European Group I demand begins to gives way to Group II demand, Iannuzzi said.

Regarding the impact on Group III consumption in Europe, the panel agreed Group II imports were more likely to compete with Group I, and would only have a small impact on the Group III market.

“Most Group II displaces Group I, very little displaces Group III,” said Brent Lok, of Chevron, adding that only in a minority or applications, such as industrial or heavy duty oils with lower viscosities, could Group II potentially compete with Group III, for cost reasons.

Ian Bell, of Afton Chemical, added that, rather than compete with each other, in the future there would be increasing combinations of Group II and III base oils blended together for energy efficiency reasons.

“Generally [Group II and III] are complimentary, as opposed to competing with each other,” he said.

By: Ross Yeo
+44 208 652 3214

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