07 October 2013 18:22 [Source: ICIS news]
SAN ANTONIO (ICIS)--As more Group II base oil production comes on line, prices of this premium product are moving in parity with Group I base oils and in some cases, even lower, a base oils buyer said on Monday.
“Group II is the prominent base stock of the US and will be in excess supply once the Chevron project is open. When the market is balanced to long like right now, you can find Group II prices for almost the same price as Group I product,” the base oils buyer said on the sidelines of the ILMA (Independent Lubricant Manufacturers Association) annual meeting.
Chevron's Group II base oil plant at ?xml:namespace>
The Pascagoula Base Oil Project (PBOP) is expected to produce about 25,000 bbl of premium Group II base oils.
“Eventually all of this Group II product will mean only one thing: total rationalisation of Group I base oils product. There will be even fewer Group I base oil plants in the US come 2014,” the buyer said.
Group II 100-viscosity base oil is priced starting at $3.12/gal ($964/tonne, €713/tonne) on the spot market, as assessed by ICIS. This price is down 15% from the same time one year ago when Group II spot prices started at $1,127.75/tonne.
Meanwhile, Group I 100-viscosity is assessed starting at $3.19/gal by ICIS.
Group II heavier grades remain higher than Group I at this time. Group II 600-viscosity is selling starting at $4.05/gal on the spot market as assessed by ICIS, whereas Group I 600-viscosity is selling starting at $3.66/gal.
The US currently produces nearly 40% of total Group II base oils production.
The ILMA meeting lasts through Tuesday.($1 = €0.74)
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