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Base oil openings, specs highlight 2019

CIS BASE OILS AND LUBRICANTS

Base oil openings, specs highlight 2019

Asia made more splash in the global base oil market in 2019 and asserted control in the area of lubricant standards, Lubes’n’Greases reports.

According to the article, in 2019, companies in the Asian region opened new base oil plants. They completed several expansions introducing capacity that will make waves in a market already has a supply glut. The year also saw the adoption of complete lube specifications in Japan and Indonesia, along with work toward completing another in China.

Asia-Pacific is the world’s leading region for base stock capacity, and refiners finished a slew of additional projects in 2019, undeterred by a growing global surplus. Several new plants and expansions were completed in China, part of a two-year dump that is the largest release ever by one country in such a short time. Shida Changsheng Energy Technology Co., Feitian Petrochemical, Qingyuan, and Lu’an Group were among the companies taking part. ExxonMobil completed an API Group II upgrade and expansion of one of its Singapore base oil plants.

In 2019, the Japanese industry developed JASO standards for heavy-duty engine oils and participated in the development of ILSAC specs for passenger car oils in North America, while the industries in the United States and Europe developed both kinds.

The Japanese Automotive Standards Organization adopted its first passenger car motor oil spec, GLV-1, which defined performance for ultra-low-viscosity 0W-12 and 0W-8 passenger car motor oils. Japanese original equipment manufacturers recommend those grades for some cars models and decided to develop their spec because ILSAC GF-6 does not include those grades.

Indonesia launched its SNI lubricant standard aimed at supporting lube blending operations within the country. The standard applies to automotive lubes and supports local businesses by subjecting imports to tests that locally produced products do not have to pass and requiring foreign firms to establish local representation.

Chinese lubricant marketers and truck manufacturers continue to develop a heavy-duty engine oil specification aimed at meeting the performance needs of Chinese models.

In terms of base stock pricing, steep crude oil values brought about by geopolitical tensions, and production cuts by OPEC+ members resulted in higher base oil spot indications in the first quarter of the year. However, the markups were tempered by the ample availability of the product.

The upward price pressure was present until mid-May when sliding crude oil and feedstock prices, together with oversupply conditions, started to weigh on spot base oil values once again.

The inception of the additional Group II product from the expanded ExxonMobil plant in Singapore in June also had a dampening effect on price indications. Additionally, ExxonMobil remained on track for a project to further expand Group II capacity in Singapore by 2023.

A spike in crude oil prices in mid-September as a consequence of a drone attack on Saudi Arabian crude oil production facilities ensued in a number of base oil price increase announcements.

Lackluster demand from the automotive and industrial segments, driven by economic uncertainties emerging from the unresolved US-China trade dispute, against plentiful availability of most grades continued to afflict base oil prices. Several suppliers resorted to trimming operating rates to achieve more balanced supply-demand positions amid thinning margins or produced more transportation fuel, given better returns.

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