Mexican base oil players see ‘buyers' market’ to continue

15 November 2013 19:57  [Source: ICIS news]

HOUSTON (ICIS)--Mexican base oil players see the current "buyers' market" in base oils as likely to continue well into 2014, one buyer said on the sidelines of the American Fuel & Petrochemical Manufacturers (AFPM) Lubricants & Waxes conference this week.

“For me the prices are good right now,” one base oil buyer from Mexico commented.

Buyer sources said that offers for Group I and Group II base oils were attractive for November and December purchases.

Sources said that offers from the US are good but pointed out that other supply regions, such as Europe, are also trying to move base oils into Mexico.

“We do not see this is going to change any time soon,” a buyer said.

“We think this is going to be a buyers market for a long time,” the source added.

Underlying the buyers' market mentality presently dominating the US base oils market is the seasonal push by suppliers to move inventory levels down ahead of year-end tax implications.

However, the seasonal inventory drain is currently abetted by low demand in Europe that is encouraging suppliers and traders in that region to approach Mexico for potential imports.

Also adding punch to lower price sentiment are upcoming expected capacity additions to global supply, led by the anticipated first-quarter 2014 start-up of Chevron’s 25,000 bbl/day Pascagoula Base Oil Plant in Mississippi.

Mexico’s base oil prices are a mix of local pricing and comparative posted and spot prices in the US, led by transactions at Brownsville, Texas.

The FOB (free on board) Brownsville, Texas, range for Group I brightstock is currently assessed at $3.74-3.80/gal.

The AFPM Lubricants & Waxes conference ended on Friday.

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By: Judith Taylor
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