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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 2016
Europe Group I base oil prices could increase in early Q3 as earlier crude oil gains have not been fully reflected in the downstream base oil market.
Baltic export prices are expected to remain within a wide range amid diverging price ideas. Some say demand may quieten amid the summer holiday season.
Rising crude oil prices sparked posted price increases in the US market in April to July, with production margins improving. With more stability in the upstream markets, expectations for Q3 are that Americas base oil prices will also stabilize. Supply/demand are balanced, with steady exports of Group II maintaining the balance.
Base oils moving into Mexico are lagging in the increases but expected to show gains in Q3 based upon the hikes in the US.
Asian base oil prices are expected to be stable-to-weak in August, as waning demand brought about by high inventories and unfavourable currency exchange rates weigh on sentiment. Group I base oils saw softer negotiations for July-loading cargoes. Snug supply of Group II base oils are expected to ease as some major refiners return from scheduled shutdown maintenance.
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.