23 July 2013 16:03 [Source: ICIS news]
LONDON (ICIS)--European Group III domestic base oil demand is quiet largely because of summer closures in the downstream automotive sector, sources said on Tuesday.
“It’s the summer and it’s hot out there. I think people would prefer to talk about the weather, rather than base oils,” said a European trader source.
Because demand is flat, prices have also stabilised this week, following the recent erosion seen for Group III 4 cSt (centistokes) and 6 cSt products.
A normally active Group III buyer said there was very little business going on at the moment.
“I am doing less and less, to be honest. Sometime, it [Group III] will change to Group II. Group II – it's changing rapidly and then there was the announcement by Chevron that it’s opening its facility in the UK. There is very little going in Group III at the moment,” the buyer said.
A producer of Group III also described the market as quiet, and prices as having remained the same as last week.
“It's really very, very quiet. If you check around, you would expect prices to be lower, but they are already low compared to gasoline, fuel and naphtha,” the producer said.
“The problem is, the person who is there to buy can easily get some [Group III base oils], but the prices aren't there and there really are no buyers. There really is no trade at all. If you keep it [the price] the same or drop it $20/tonne (€15/tonne), there is just no demand,” the producer concluded.
The main use for base oils is in the manufacture of lubricants, of which there are thousands of types. The best known are automotive lubricants.
Group III base oils are a higher-quality lubricant and severely hydrocracked in order to achieve purer base oil.
($1 = 0.76)
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