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 2014
Going into the third quarter, US base oils await full following and implementation of a round of posted price increases led by major Group I producer, ExxonMobil. Tight inventory conditions prevail in early July, with the 22,200 bbl/day Group II ExcelParalubes plant entering an extended maintenance turnaround of 50 days. The US market continues to await the commercial start-up of the 25,000 bbl/day Chevron Pascagoula Base Oil Plant in Mississippi.
Into the third quarter, the Asian region expects to see an increase in Group II supply on the back of the commercial start-up of Hyundai-Shell’s 650,000 tonne/year joint venture unit in Daesan, South Korea, by August. Group I brightstock spot prices will most likely be supported by snug spot availability and healthy demand from China, but some buyers expect this demand to gradually weaken as the colder autumn and winter seasons set in. Meanwhile, SN150 and SN500 demand is likely to remain sluggish amid the absence of strong market stimulus and ample Group II availability.
At the start of the third quarter, European domestic Group I base oil prices are caught between the upward pressure of rising feedstock prices and a weaker euro, and the fact that the market is well supplied going into the traditional slow season of July and August. Support for prices is likely to be undermined when the first volumes arrive from Chevron’s aforementioned Group II plant in Pascagoula.
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.