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
The global base oils supply scenario continued to evolve amid growing demand for more refined lubricants from the automotive sector, shifting the focus of production to Group II and Group III base oils from Group I.
New Group II or Group III projects are slated in the next few years in the US, Spain, the Middle East, South Korea and Singapore.
Europe, where Group I production is traditionally predominant, is affected most by this change, with rising imports, particularly of Group III base oils, arriving from Asia and the Middle East. Recently, there has also been an increase in imports of Group II base oils from the US and Asia.
Base oil quality and supply varies by region, so it is increasingly mobile in global trading. The US is the largest supplier of Group II base oils. Group III base oils are largely produced in Asia. Gas-to-liquid (GTL) base oils come from the Middle East.
Updated to mid-August 2013
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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.