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 Q4 2014
European Group I prices were under pressure at the start of the fourth quarter and price decreases appeared inevitable. The market is oversupplied through poor demand, both domestically and in the export markets. Prices are under additional pressure from declining feedstock prices. The downturn is likely to be more pronounced in the export markets, as exchange rates are acting to support euro-denominated prices in the domestic market, albeit only to a certain extent.
In Asia, spot prices are poised to decline further in the fourth quarter, especially for Group II base oils. The impact from the existing oversupply is expected to weigh further on prices as the winter season approaches in some parts of northeast Asia. Furthermore, as most buyers would try to keep their inventories lean before the new year, trade is expected to be subdued.
Pushed by new Group II capacity from Chevron in the US, prices posted reductions in the Americas market in August this year, with all grades moving down by 10-31 cents/gal, depending on the grade and producer. Chevron eliminated its Group II west coast prices and input US Gulf pricing, setting a competitive tone for the first quarter of 2015 for Gulf producers. For the Group II market, Motiva announced decreases of 15-45 cents/gal, effective from 1 October, revealing the depth of competition expected going forward.
News & analysis
Base oils-Lubes news & analysis
ICIS price assessments are based on information gathered from a wide cross-section of the market, comprising consumers, producers, traders and distributors from more than 250 reporters world-wide. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments.
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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.