Base oils-Lubes Prices, markets & analysis
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Base Oils-lubes overview Transcript
Base Oils are a synonym for base-stocks, they are mixed with additives to form finished lubricants. Biggest end-use is the automotive sector and there’s a big trend right now for higher quality base stocks, so we’re actually seeing some consolidation of our Group 1 Base Oil plants and a bigger move to Group 2, Group 3 and even gas-to-liquids plants.
Automotive emission standards are the biggest factor affecting base oils.
There’s also a seasonality factor. Heavy drive season that’s usually May to September, that’s when demand is the strongest for base oils.
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Base oils-Lubes: Market overview
Updated to Q3 2015
Group I base oil prices in the European domestic and export markets appear set for substantial decreases as the market is pressured by collapsing prices of Russian material in the Baltic and Black Sea markets. These latter markets suffered large losses at the end of the second quarter and this trend is likely to continue as a result of improving supply. Exceptions from this trend will include the heavy grades; European brightstock and Russian SN900, which are becoming increasingly niche with the ongoing emergence of Group II and Group III base oils.
Tight supply of heavy grade base oils in Group I and Group II developed late Q2, resulting in several posted price increases on brightstock and the 500-600 viscosity base stocks.
Group II 600 viscosity base oils are also in narrow supply with even large key producers seeking volumes in exchange options with other producers. However, no imports have penetrated the US market as Americas producers are keen to supply domestic buyers with domestic products.
In the light grades base stocks of 70-85 viscosities, drivers are different and these grades are considered to be long on supply for Q3. These grades are actively being exported to other regions such as India and Africa. SN100 and SN150 base oils are long for some producers, more in balance for others, with differences in crude oil selection slates posing a factor for these conditions.
In Asia, base oil prices, especially those of high viscosity grades such as SN500, 500N and brightstock, are poised to remain firm on the back of snug spot availability in the region. Despite softening crude oil values at the beginning of July, most market players were confident that prices would remain supported by limited supply, which was brought about by scheduled turnarounds. Some refiners also reduced output due to squeezed production margins from firm feedstock vacuum gas oil values. However, the price hike for heavy grades in Asia is expected to be capped by slowing demand from China as the colder weather sets in.
News & analysis
Base oils-Lubes news & analysis
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Base Oils-Lubes Methodology
About Base oils-Lubes
Base oils are the main component of finished lubricants and are derived from the heavy crude oil fraction in vacuum distillation. They are refined to impart physical and chemical properties that will make a good lubricant. Most base oils are combined with small amounts of chemical additives to form the finished lubricants such as motor oil.
The traditional method of making base oils involves solvent extraction to remove aromatic compounds and solvent dewaxing to take out unwanted waxes. More recently hydroprocessing techniques employing hydrogen and catalysts have been used to make base oils.
Group I base oils which are mostly produced by solvent processing are used in less demanding applications. Group II and III base oils are produced by hydroprocessing and used in higher performing lubricants. Group IV base oils are synthetic oils typically based on polyalphaolefins (PAOs). Group V oils are used in the formulation of oil additives.