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Updated to Q2 2019
Group I
Supply of Group I base oils in the second quarter is likely to be more balanced than in the first as the market had begun to absorb excess supply towards the end of the previous quarter. In addition, some refiners in Europe and Russia will be entering periods of planned refinery maintenance, which could bring tighter market supply.
The demand outlook for Group I base oils during the second quarter is unclear, with suggestions that those able to substitute Group I material with Group II may look to do so should prices for the latter group remain attractive. European Group I may be more attractive to buyers than Russian product as it is of a higher specification and compliant with the Registration, Evaluation, Authorisation and Restriction of Chemicals.
Group II
The outlook for Group II base oils Q2 supply is mixed. It is unclear whether the new plant in Rotterdam is running at full capacity, and if not, whether output will ramp up significantly. Higher crude prices have lent support to US Group II posted prices. If these become less competitive, the influx of imports into Europe could slow.
The outlook for Group II Q2 demand is mixed. There is a possibility that, should growing competition in the market result in lower prices, players that are able to switch from Group I to Group II product will do so. However, the outlook will also depend on downstream lubricants demand.
Group III
Competition should remain high, despite some Russian product being restricted by maintenance. No additional vessels are expected from one Korean supplier in April and May, due to a turnaround. Offers from a Korean supplier that has not had a major presence in the European market so far were heard for early Q2 2019, though logistics and possible transportation costs were a possible hurdle to buyers.
Consumption is expected to be stable to strong for Q2 2019 versus the previous quarter, and in line with seasonal trends. Demand for Group III is expected to see continued support from higher lubricant specifications. UK consumption for early Q2 2019 looked to continue its recent healthy trend.
We offer the following regional Base oils-Lubes analysis and news coverage to keep you informed of factors and developments affecting prices in the Base oils-Lubes marketplace.
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