HOUSTON – Europes base oil market is tight, and blenders are scrounging for highly refined stocks. Asias is awaiting completion of a number of projects that will more than cover its existing shortage, and Latin America looks to benefit from a Group II surplus in North America.
Those thumbnail sketches of regional markets were offered by a panel of speakers Friday at the International Lubricants and Waxes Meeting held by the National Petrochemical and Refiners Association.
Patrick H. Lienart, global base oil category manager for Chevron Global Lubricants, said the European market is reverting to balance after significant shortages earlier this year. But he added that the region could slide back into a predicament of undersupply if more disruptions occur.
The reliability of suppliers has not been what it used to be, said Lienart, who is based in Ghent, Belgium, suggesting that this could be due to a lack of investment in aging facilities. Europe is much more vulnerable than it used to be.
Lienart said availability of Group III oils is especially tight and that blenders are looking to Group II imports to help meet the growing need for high-performing stocks. Many are worried about their ability to find enough of these oils going forward.
Where we see a tight situation today, demand will continue to increase and the situation could become even tighter, Lienart said. There is some concern about where all the supply is going to come from.
Joe Rousmaniere, head of Petronas base oil business, said trends in Asia are being driven largely by growth of lube markets in China and India. China was a net exporter of base oils not many years ago, he said, but now imports 30 million gallons per month. India imports 20 million gallons, primarily process oils.
Lienart said Latin America used to import a significant portion of its base oil from Europe, but has recently been forced to turn to North America instead. Fortunately, he said, North America seems headed for a surplus of Group II, some of which will probably be sold southward.
The performance level of [lubricants in] Latin America could develop much more rapidly than we had anticipated, he said.
Marathon began yesterday to wrap up a maintenance turnaround at its Group I base oil plant in Catlettsburg, Ky., market sources said. The facility, which has capacity to make 6,700 barrels per day, is scheduled to resume normal operation by the end of this week.
Paraffinic base oil prices were unchanged this week. The price of crude oil on the New York Mercantile Exchange closed yesterday at $58.42 per barrel, according to Bloomberg. That was 82 cents lower than the price a week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.