Base oil gross refining margins are up in North America this year, but are lagging well behind those being seen in Western Europe. According to an analysis by PFC Energy, gross margins in Rotterdam, Netherlands, have averaged U.S. $182 per metric ton in 2003, compared to $147 on the U.S. Gulf Coast. (PFC Energy, which is based in Washington, D.C., and has an office in Paris, said its analysis is based on Group I base oil prices minus weighted-average feedstock costs.)
Margins on both sides of the Atlantic are lagging behind high-water marks set in 2001, but are running significantly higher than in any other year since 1998. Even more striking, however, is the spread between those margins. Rotterdams are 24 percent bigger than those on the Gulf Coast. In the previous four years, those margins did not differ by more than 12 percent.
As in North America, base oil supply in Western Europe has been crimped this year by shutdowns at several plants – a fact that has helped boost margins in both regions. Western Europe, however, has the worlds biggest surplus of base oil capacity, meaning it has traditionally supplied regions in deficit.
Observers say demand for these barrels has increased in 2003 because of disruptions around the world: a crippling strike early this year at Petroleos de Venezuela S.A.; closure of one of the few base oil plants in Australia; and shortages in Asia-Pacific. It is all adding up to make 2003 a profitable year for European suppliers.
Base oil posted prices in the United States were unchanged this week. The price of crude oil on the New York Mercantile Exchange closed at $30.27 per barrel yesterday, $1.39 lower than a week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.