FocusChina’s base oils prices to rise in Q2 on falling supply – sources

18 March 2013 06:30  [Source: ICIS news]

By Whitney Shi

China’s base oils prices to rise in Q2 on falling supply – sourcesSINGAPORE (ICIS)--China’s Group I and II base oils prices are expected to increase in the second quarter of 2013 amid falling supply and higher import costs, market sources said.

Domestic supplies of Group I base oils will decline in April-May because of maintenance during the period, the sources said.

PetroChina’s Dalian Petrochemical and Daqing Petrochemical will shut their Group I base oils units for turnarounds from mid-March to late April, company sources said. The units have a nameplate capacity of 450,000 tonnes/year and 250,000 tonnes/year respectively.

Sinopec will shut its 300,000 tonne/year Group I base oils plant in Beijing on 20 April for a one-month turnaround, a company source said.

The combined capacity to be taken off line in April makes up about 30% of China’s total Group I production capacity, according to ICIS data.

Meanwhile, Group II and III base oils prices in the Asian spot market are expected to rise in the second quarter amid decreasing production and rebounding demand, market sources said.

Asia will lose approximately 22% of its production capacity in the period due to maintenance.

South Korea’s GS-Caltex will shut its 1.3m tonne/year Group II/III plant for one month from mid-March to mid-April, while S-Oil plans to conduct turnarounds at its 500,000 tonne/year Group III plant from early April to early May, sources from the companies said.

Higher import costs will thus push up Group II and III prices in the Chinese market, and will also weigh on China’s base oils imports in the second quarter, importers in China said.

Average prices of Group I and II base oils have increased by approximately 3% and 1% respectively in China from 1 January to 15 March, ICIS data showed.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Whitney Shi
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