SINGAPORE (ICIS)--Group I base oils are facing stiffer competition from Group II material in India because of a narrowing price gap between the two products, buyers said Monday.
This applied to both light grade 150N and heavy grade 500N material, they said.
Prices for Group I SN500 have steadily increased since the beginning of the year, gaining about 12%, to $1,060/tonne CFR (cost and freight) India on 25 July, supported by snug spot availability of Middle East supply, according to ICIS.
In contrast, Group II 500N import prices for India fell 1.6% over the same period to $1,092.50/tonne CFR India, the data showed.
Group II 500N prices in Asia have steadily fallen this year, shedding about 8% from 3 January to average $1,017.50/tonne FOB (free on board) NE (northeast) Asia on 18 July, according to ICIS data.
Ample spot availability and lukewarm demand continued to exert downward pressure on Group II spot prices, market sources said.
“Group II material is easily available,” an Indian buyer said.
“It makes sense to buy Group II [cargoes], which has better quality just for that little bit more of prices,” he said, adding that “Group I cargoes from the Middle East are also limited at this time, partly because of Ramadan as well.”
Ramadan is an annual month-long Muslim fasting, which ends with the celebration of Eid-ul-Fitr on 28 July this year.
Group I SN500 cargoes, on the other hand, are being quoted at around $1,030/tonne FOB Middle East as supply from the region is scarce amid the Eid holidays.
In some countries in the Middle East, Eid-ul-Fitr is celebrated for more than a week.
Additional reporting by Veena Pathare
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