The impact of volatile raw material costs alongside confused economic concerns couldnt be more apparent than seen in the base oils market. Activity remained at a snails pace – a trend which has persisted for about a month.
Suppliers contend that orders are at traditional levels for late summer, although in some cases demand is below normal even for August. Most market sources, however, anticipate demand will pick up by mid-September.
Pure spot trade was virtually nonexistent during the week ended August 15, with no confirmed business found. This was largely attributed to the uncertainty surrounding availability and price ideas.
Spot export price assessments of light vis grades (neutral 100 to 200) are pegged in the neighborhood of $2.20 to $2.30 per gallon FOB. Bright stock values rebounded slightly from last week and stood around the $2.70 to $2.75/gal mark FOB. This represented an increase of about 10 cents/gal from the lows reported in recent weeks.
Sellers are not convinced that offers should be reduced, but consumers are of a different opinion.
Base oil buyers said that availability is abundant and that it would take steeply discounted prices to move base oils offshore. More and more export orders are being filled by European and Asian suppliers due to the still-high prices in the United States, traders said.
Suppliers are depending on a spate of planned downtimes to stop further price decay in the spot market. As it stands, several producers often active in the spot market have opted to the sidelines in anticipation that a tight supply scenario will emerge.
Citgos 9,500 barrel per day Lake Charles, La., facility is scheduled to be taken off line in late September for approximately three to four weeks for maintenance. American Refining Group is planning a 10-day turnaround in early October at its 2,400 b/d plant in Bradford, Pa. ExxonMobil is slated to bring both Beaumont (12,500 b/d) and Baytown (21,500 b/d) in Texas down for planned shutdowns during October or November, but details were not clear. Valero will undertake a scheduled turnaround at its 11,500 b/d Paulsboro, N.J., refinery in the fourth quarter.
At the close of Tuesdays NYMEX session, light sweet crude values settled at $72.38 per barrel, down 4 cents/bbl from a week ago. During intra-day trade, a high of $72.50/bbl was reached, while the low was at $71.40/bbl. The futures market dipped to $70.10/bbl last Friday, but started to rally on Monday on hurricane-related threats brewing in the Atlantic and the Yucatan, an industry analyst said.
Carolyn L. Green, based in Houston, can be reached at carolynlgreen@gmail.com.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.