EU Group II Imports Stay Below Quota


EU Group II Imports Stay Below Quota

By a slender margin, base oil traders stayed within the half-year 200,000 metric ton quota on API Group II imports into the European Union, probably because of depressed demand due to the COVID-19 pandemic’s chilling of economic activity.

Imports from the United States and Saudi Arabia of 150, 220 and 600 neutral viscosity grades amounted to 183,032 tons during the first six months of the 2020, according to data provided by the European Commission. The same quota will apply for the final six months of the calendar year.

The European Commission adopted the measure in November last year to objections from some base oil producers and the Union of the European Lubricants Industry, a trade body based in Brussels. As a concession to those concerned that the limit was too low, the commission agreed to review the program mid-year.

Only certain Group II grades from countries without free-trade agreements with the EU fall afoul of the quota and face a 3.7% tax on quantities exceeding the limit. These include refiners in the United States, such as Chevron, and Luberef in Saudi Arabia. Base oils with viscosities outside the range do not qualify for the extra duty.

According to data gathered by base oil price reporting agency Argus Media, the total amount of all Group II grades entering the bloc – including those lighter than 150N or heavier than 600N – came to 324,625 tons in the first quarter of 2020. Since the quota was rolled out, first quarter Group II imports from the U.S. dropped to 198,880 tons and from Asia to 125,740 tons. These decreases were mitigated by ExxonMobil‘s 900,000 tons per year Group II unit in Rotterdam, which output 158,000 tons in the same quarter.