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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 2016
Europe: The European domestic Group I market is likely to tighten in Q4 if the Baltic market does the same, as a large proportion of European domestic sales originates there. Baltic exports are expected to tighten on the back of a planned maintenance scheduled in October, although this is far from certain as demand remains unexceptional. Upward pressure is expected on Black Sea prices amid a lack of supply from a key seller.
Regardless of supply and demand, all base oil prices are likely to firm if crude oil prices remain at higher levels – the exception being Group III – which is heavily oversupplied.
US: With Chevron’s posted increases in late August, US base oil prices stablilised going into Q4. Motiva issued posted decreases on all its Group II grades in October, setting prospects for more decreases during the quarter. However, as crude oil strengthened to the $50s/bbl, base oil producers held back on following suit. Market participants continue to expect lower prices in Q4 and going into Q1 2017 because of seasonally softer demand. Group III domestic prices are considered to be stable in Q4 and moving to Q1.
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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.