ICIS is implementing a process of rolling consultation on all of its pricing methodologies. This consultation paper is part of this formal process and covers all of the ICIS primary price points included in the base oils weekly publications.

The consultation asks both general questions about the suitability of the ICIS pricing methodology and questions addressing specific base oils market issues.

Click here to view the Base-Oils-Methodology-Consultation 2023 GMC0323


ICIS received four responses, and this summary takes into account all of them.

Two responses were received, asking ICIS to address the growing Group III price variance between East and West. One of the responses specifically referred to rising Group III prices in Europe and a stagnant market in Asia. A suggestion was made to consider the introduction of a Group III+ and PAO index, while recognising in the interim that Group III+ commands a premium over other Group III grades. It was also suggested that ICIS should factor in feedstock price movements in its base oil assessments, while adding term/contract assessments to its European coverage. One response included a request for more details on price movements – and the reasons for such movements – and the inclusion of more information on crude oil prices.


ICIS reviewed the price difference between Asia and Europe and found that the difference reflects market dynamics. Higher prices in Europe stem from Group III availability being structurally tight due to limited production, resulting from production issues in the past year and the lack of Russian material in the European market. Prices in Europe are assessed regionally and are not based on differentials or variations in other regions. Within Asia, however, ICIS changed its methodology in January 2023 for Group III to include parcels of 500 tonnes, down from 1,000 tonnes, to capture a larger share of the Asian market outside of China. ICIS consulted the market about the introduction of Group III+ and PAO indices and found that most of the market does not see the need for a Group III+ index as spot Group III and III+ prices are similar. The same feedback was received about the introduction of an index for PAO, which is used less than Group III/III+, with grades, specifications and prices varying significantly among different producers. ICIS has, therefore, decided not to introduce indices for Group III+ and PAO grades. ICIS also decided not to add term/contract assessments to its European coverage at this time. Freely negotiated contract volumes in Europe are small compared with index-based volumes, making the introduction of a freely negotiated assessment difficult. ICIS at times receives information on contract price levels, but the feedback is limited and often reflects a formula-derived price rather than a freely negotiated contract price. It was also suggested that ICIS should factor in feedstock price movements in its base oil assessments. While there is limited direct correlation between crude oil or vacuum gas oil (VGO) prices and base oils prices, ICIS has and will continue to factor in feedstock movements and supply-demand changes in its coverage of base oils, particularly during periods of low liquidity. ICIS endeavors to move prices quickly to avoid lags in either direction, closely following feedstock movements when there is a lack of activity in the spot market.

Consultation on this document closed on 24 February 2023