Newsletters/ April 2, 2021
Hopes that Base Oils prices will stabilize and even decrease seem to vanish as more refineries announce either limited supply or no supply at all for April while demand is still high in all markets.
In Europe, the Base Oils prices have extended their increase on all the groups as local blenders compete to secure any available volume to respect their contractual commitments. Even more, this week Total Refinery announced the closure of its base oil unit in France. The plant has a capacity of 240,000 b/d and was temporarily closed since December 2019 because of a fire that caused damages to the distillation unit. This event, along with other closures and maintenance in Europe, will cause even more supply tightness in the coming months.
In Russia and the Baltics, Base Oil prices have extended their increase sustained by high demand and limited supply from Europe and other regions. The volumes offered for April were lower, as some of the refineries have planned maintenance. Buyers had to make aggressive bids to secure any volumes. However, we at Shamrock managed to secure some Russian-origin Base Oils volumes. Please get in touch with your traders for the quotation and look at this Newsletter Quality review of Russian Base Oils.
In Asia Group I prices of the region are still very high due to shortage. With European and Russian base oil prices rising weekly, the arbitrage is not widely open, leaving the local blenders with limited supply options. Group II and III also remain short, with heavy maintenance taking place in the region.
Due to the weather event in Houston, at least two refineries had to declare Force Majeure in the US. Since then, even if they are just starting to resume operations, the priority comes to the domestic market, especially to contractual customers.
Prices of the paraffinic Base Oils have seen multiple increases during the last month. Some refineries are starting to offer floating prices due to the uncertainty on pricing and loading schedules.
On top of this, disruptions in the shipping industry bring higher costs to Base Oils importers worldwide and leave some regions without option since some trade lanes have been put on hold or canceled due to Suez Canal blockage. We are covering more in a Supply Chain review.
What can you do?
Let us know in advance your base oils requirements, and we will find the best alternatives for you. Keep in mind, availability is limited, and stocks are selling very fast.