Asian base oil markets have been hit hardest by disruptions from the epidemic, which have limited trading in the Middle East, while entities in Europe and the United States have largely been unaffected, said Vicky Ellis, senior editor manager for commodity intelligence provider ICIS. 

Measures taken to contain the disease have battered China’s economy, stalling industrial activity and halting exports. Zhu Min, former deputy managing director of the IMF, estimated damage to the economy at U.S. $196 billion in lost revenue.

Chinese imports of several raw materials have also dropped, said Denis Varaksin, director of base oils and waxes at DYM Resources GmbH. “So, the import of base oils has decreased massively, and a big part of that import was Group III … from South Korea, Malaysia and the Middle East.”

There is a growing glut of API Group III base stock that was destined for China, and it is likely that prices will fall as producers look to offload cargos elsewhere.

“These flows are likely to be re-directed to other markets such as Europe, [the U.S.] and India, driving premiums for Group III down,” Varaksin said.

Iran is also suffering due to the virus. As of March 5, Iran’s central government had reported 107 fatalities in the country, and as of Feb. 24, all of Iran’s neighbors except Azerbaijan had closed their borders, reducing Iranian Group I exports to those markets.

 “Because of the Chinese import drop, the Group III market globally is long, and because of the Iranian export decrease, the Group I market is short in the Middle East, India, Africa and Southeast Asia,” said Varaksin. 

Lubrizol Vows to Fight Charges

Lubrizol will “vigorously defend” itself against charges of lax safety standards and pollution filed by French prosecutors, a company spokesperson said.

The charges and an order to pay more than €4 million stems from the September fire at Lubrizol’s additive manufacturing facility in Rouen.

Prosecutors also ordered the company to establish a €375,000 escrow account “to guarantee the rights of victims by allowing for the repair of human and environmental damages.” 

The company said its mise en examen status – meaning it is under judicial examination – “will allow Lubrizol to demonstrate that the company has fully complied with its obligations as operator of a classified installation and that its fire-fighting measures met the requirements of its permit and the applicable regulations.”

The company also stressed that its “fire-fighting measures and other operations are subject to very regular inspection and permitting by environmental and safety regulatory agencies and that specific responses already have been provided to firmly challenge all of the various points raised by the inspection report created after the fire.”

“Lubrizol is confident that the investigation underway will determine the origin of the fire, which much of the evidence suggests was outside of Lubrizol’s site, and demonstrate that Lubrizol has completely fulfilled its regulatory obligations. Lubrizol will of course continue to cooperate closely with the judicial authorities,” the company said.

Provincial authorities have permitted resumption of limited activities at the plant.

Greece Leads EU in Recycled Industrial Lubes

Greece ranked first in the European Union for the recycling and reuse of industrial lubricant oils, said Dimitrios Kontaxis, managing director of Lubricants and Petroleum Corp. The country has several base oil rerefineries, including LPC’s plant in Aspropyrgos, which has capacity to produce 800 barrels per day of rerefined Group I base oils. 

At the same time, LPC announced two new business initiatives. The first is the opening of a €3.5 million industrial grease plant at its facility in Aspropyrgos, with production capacity of 3,000 metric tons annually. This is part of an effort to cement its position as one of the largest lube suppliers in Southeastern Europe.

The second initiative, a joint venture with Algeria’s largest petroleum company Naftal, would give the company a greater presence in Africa. It includes building a blending plant in Algeria that can produce 55,000 tons of lubricants and 5,000 tons of greases, an estimated €30 million investment that is expected to be completed in 2022. 

Doing Deals

Abu Dhabi National Oil Company announced at the ICIS World Base Oils and Lubricants Conference in London that it has signed an exclusive seller agreement with Xiamen Sinolook Oil Co. Ltd, appointing it as exclusive seller of Adnoc’s Group III base oil in China. 

Infineum’s CEO Trevor Russell announced that the company has invested more than $100 million developing products for ILSAC GF-6. Infineum is one of four major additive companies that have developed and manufactured additive packages for the new passenger car motor oil category.