Market Topics

Base Oil Report


Every new year starts with a sense of renewed energy and great expectations of changes to come.

This year will be no different, and within the base oils segment, some of the anticipated transformations are certain to have long-lasting effects.

One of the main topics of discussions in recent weeks has been the reshuffling of trade patterns as a result of fresh capacity coming on stream in different regions.

Motiva revealed the exciting news on Nov. 30 at the ICIS Pan-American Base Oils and Lubricants Conference in New Jersey that the company has begun producing API Group III base oils at its Port Arthur, Texas, refinery.

While Motiva was heard to have already found a home for most of the commercial volumes it intends to produce in the first year, market participants surmised that the new output in the United States would displace some of the Group III base oils that have been traditionally imported from South Korea, Qatar, and more recently, the United Arab Emirates.

Another Group III player making overtures towards conquering U.S. market share is Bahrain Petroleum Co. (Bapco). The producer has signed a new supply agreement with Neste that allows Bapco to launch its own brand of base oils from the joint-venture plant the two companies own in Sitra, Bahrain. Neste already has a well-established customer base in the U.S. since its base stocks possess OEM approvals, while Bapco expects to soon obtain its own approvals, company officials told LubesnGreases.

Industry experts forecast steady Group II and III demand growth globally, driven by new emissions regulations and car manufacturers requirements for high-performance base oils to be blended into premium lubricants.

The U.S. has long been the worlds Group II hub, but with new production coming on stream soon in Europe and Asia, U.S. suppliers may have to look for export opportunities in South America and Africa, several conference speakers noted.

Group I base stocks were still expected to be required in certain applications in the future, but their share in the production puzzle is definitely shrinking.

While the new capacity and altered trade flow will offer consumers more pieces to choose from in terms of supply sources, history suggests that players can expect to see more competitive pricing, as well.

Related Topics

Market Topics