U.S. exports of lubricant base oils from January to June of this year reached 14.2 million barrels-a volume equal to 48 percent of the country’s total base oil production in that same period, according to current data from the federal Energy Information Administration. Total U.S. base oil output for the period was 29.3 million barrels.
First-half exports also were 8 percent higher than the 13.1 million barrels moved offshore in the first six months of 2011. But Jeff Mavelli, president of the global ship brokering firm SPI Marine USA in Norwalk, Conn., observed that the uptick never felt very pronounced.
The overall impression all year was that both chemical and base oil exports seemed slower, but when you look at the actual figures it turns out surprisingly to have been 4 or 5 percent higher, Mavelli told Lube Report.
SPIs own data, which cover only those cargoes that traveled by ship, indicate that U.S. base oil exports in the years first four months ran at about the same annualized rate as in 2011, around 100,000 tons per month, Mavelli said.
Canada and Mexico are the largest country destinations for U.S. exports, and together accounted for 34 percent of what went out in the year’s first half, EIA data indicate.
However, barrels going to these two neighbors usually move by rail and truck, Mavelli pointed out. He said South America and the Caribbean are also major destinations for U.S. base oils, and together receive about 40 percent of the water-borne barrels.
In more recent months, volumes may have begun to slip, Mavelli commented. Everything fizzled a bit in the summertime.
Mike Burnett Jr., managing director of international sales at Woodlands, Texas-headquartered Renkert Oil, said arbitrage opportunities for Europe-to-the-U.S. Gulf Coast and Asia-to-U.S. are good right now, thanks to higher U.S. base oil prices.
And thats probably also why exports have been down a bit lately, depending on what business you serve, added Burnett, who is based in Brandon, Miss. He said exports that target process oil markets are still moving well, while things areslower on the lubricants side.
David Hieronymus, manager of international base oil sales for Motiva in Houston, agreed that arbitrage disfavors U.S. base oils right now. He pointed out that API Group I suppliers in the United States posted a price increase in mid-September which further opened the gap versus European barrels.
Also, he added, from what I’m hearing about the European economy, markets are flat. It seems that buyers, especially in the southern European countries like Spain, Italy, Greece and Portugal, are keeping very low inventories and are unwilling to make purchases.
Other sources also said shipments of U.S. base oils may be seeing headwinds. One supplier in the Gulf Coast area, speaking off the record, blamed new capacity in the Middle East for creating a very long market that isnt lifting U.S. exports. There’s a lot of product sitting in tanks in the Middle East and Asia, and by and large the foreign markets are not buying as much as they did a year ago.
New refineries competing for buyers attention include the Pearl gas-to-liquids project that Shell Oil and Qatar Petroleum started last summer, and an SK-JX Nippon joint venture that opened in May in South Korea.
Another is the Bapco-Neste Oil joint venture in Bahrain that streamed 8,000 barrels per day of Group III capacity late last year. A lot of the Bapco-Neste material has stayed in Europe, although some of it, which Renkert markets for Neste, has come to the United States and Canada, Burnett said. There’s also a lot of material coming to the U.S. from Asia.