Last month’s ICIS World Base Oils & Lubricants Conference was filled with latest news and insights from the industry. Have a read of our previous article here.
At Shamrock, we value all our relationships and put customer service first. Attending these conferences not only help us to foster our relationships, but also give us valuable insights that we can pass on to our customers.
Some of the insights are summed up here:
- A round of maintenance is currently taking place at several refineries across Europe, which is making supply very tight. The same is projected later in Q1 for refineries in the U.S. and Asia Pacific. This means that, in the first half of the year, global supply will be very tight thus supporting high prices. However, in the second half of the year more base oil capacity is expected to be put into operation, which will ease the supply tightness and will drive prices down.
- The demand for Group II base stocks in Europe is increasing which is caused by more advanced requirements of OEMs and ecological standards. Exxon Mobil is due to complete its first Group II base oil plant in Rotterdam by 2018.
- Chinese demand at the beginning of this year was extremely high due to the Lunar year which was earlier than usual. The strong demand from China made base oil supply in Asia very tight.
- On the whole, not a lot of infrastructural changes are expected within the next 5 years – only 4 million ton p/a capacities are expected to be added within the period. The USA and Korea will remain the principal suppliers of Group II base stocks, whilst the Middle East and Korea will remain key Group III suppliers. Suppliers of Group I paraffinic grades will be more focused on heavy grades that are more marginal.
- Despite the global market switch to higher quality lubricants, there is still enough room for producers of Group I products. The most demanded grades are SN 600 and Brightstock. Among the light grades, SN 150 has a chance to stay in the market in the segment of PVL lubricant manufacturers.
- Key trends in the automotive industry include: fuel economy, reduction of CO2 emissions, more hybrid and electric cars, which will all lead to higher standards for lubricant manufacturers and more advanced products (lower viscosities, longer drain intervals).
- Producers of commercial vehicles are also looking for more efficiency and they need to comply with higher ecological standards and think more about fuel economy. Similar to the PVL segment, this leads to higher requirement for finished lubes – more synthetic grades, lower viscosities, longer drain intervals.
We will continue to think about and use the insights gained from the Conference to improve our service to our customers.