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Base Oil Report


There has been a lot of discussion about API Group I base oils being phased out of the market and the need to fulfill a growing demand for lighter-viscosity, low-sulfur base oils, which seems to be the perfect job for Group II and III base oils.

However, at least one Group I base stock cut that has been in the market for many years-and does not seem ready to disappear any time soon-is bright stock. This cut is still in high demand for certain applications and sometimes undergoes periods of extreme shortage.

Some producers have developed processes to manufacture this cut through innovative technology. ExxonMobil plans to start producing a bright-stock type cut after its recently announced Group II expansion in Singapore is completed in 2023. This cut will fall within the Group II category and be used in new applications, but have similar characteristics to traditional Group I bright stock.

Also in July, Phillips 66 and Flint Hills Resources ceased posting prices, as Flint Hills decided to stop marketing base oils in late 2017. The two companies used to market base oils produced at the Excel Paralubes plant in Louisiana, and in lieu of two separate postings, Excel Paralubes introduced its own Group II Gulf Coast prices. Phillips 66 will continue to post prices for the Group II+ and III oils it markets from the S-Oil plant in South Korea.

During June and July, base oil producers grappled with divergent currents as firming crude oil and feedstock costs exerted upward price pressure while softer demand weighed values down-a situation that was neither novel nor unprecedented.

Despite a slight decline in requirements, suppliers said that business had been livelier than anticipated in early July, perhaps because buyers were concerned about the steeper crude oil values and were eager to beat any potential price revisions.

However, the fact that the market entered the slower summer season, and that activity in downstream lubricant segments tends to decline at this time of the year, was expected to impede significant price swings.

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