Base Oil Price Trend and Forecast

Regional Price Overview

Get the latest insights on price movement and trend analysis of Base Oil in different regions across the world (Asia, Europe, North America, Latin America, and the Middle East & Africa).

Base Oil Price Trend for H1 of 2023

Asia Pacific

The base oil prices in the Asian Pacific region were adversely affected by the reduced demands and low production rates. Even after ease in covid restriction policies and OPEC+ production cuts, base oil prices continued to struggle. The slowdown of spot sales and the falling trend of crude oil prices have inhibited the enthusiasm of distributors to hold goods, and the increase in overseas imports eased the concerns about tighter supply caused by domestic maintenance in the early stage.

The imminent arrival of a large amount of Group II oil products at Chinese ports made up for the production losses during the planned maintenance period of domestic producers in February and March, putting further pressure on the spot market. The same stagnancy followed in the second quarter, where the prices inclined though marginally owing to certain market volatilities. Hence, the availability of ample products and low demands from the lubricant industries caused the price trends to remain flat in the Chinese domestic market.

Europe

The European market was stagnant in terms of the prices of base oil as the supply and demand equilibrium was maintained throughout the first two quarters of 2022. Given the subdued demands across the European markets, the manufacturers were forced to lower their quotations hoping for positive product movement. However, no positive impact was seen in the market, and the suppliers dumped the surplus supplies in the international market at much cheaper rates. The overall market of base oil slipped, adversely affecting the prices.

North America

The price trends for base oil remained weak in the US domestic market owing to muted market sentiments. The price trend was negatively affected by the declining sales in downstream industries. The cost of raw materials, logistical infrastructure, and labor increased in the region, which was responsible for the marginal hike in base oil prices.

Analyst Insight

According to Procurement Resource, the price trends for Base Oil are expected to oscillate in the upcoming quarter. The price decrease by the manufacturers had not been successful in attracting new businesses. The end-user demands from domestic and international markets seem uncertain, which will have a major impact on the prices of base oil globally.

For the First Half of 2022

Asia

Since the beginning of 2022, international crude oil prices have kept increasing, which directly impacted the price trends for base oil. In the first quarter, the cost of industrial white oil averaged 7583.74 RMB/MT in the Chinese domestic market, recording a 41.67% Y-O-Y increase. The mismatch between supply and demand and the continued destocking owing to geopolitical turbulence led to the continuous price rise.

The steady demand from the automotive sector further supported the raised quotations. The high costs of raw materials coupled with poor logistics lowered the profit margins of the manufacturers. The price of second-tier base oil averaged 6447.5 RMB/MT, registering an 80.6%  Y-O-Y increase towards the end of the second quarter.

Europe

With Europe being the most hard-hit region owing to the Russia-Ukraine war, inflation and commodity pricing reached blazing highs. The complete embargo on Russian oil by the EU, coupled with retaliatory sanctions, led to huge volatilities in the crude oil and allied markets. The high-power costs coupled with steady demand kept base oil prices towards the high end of the scale. The base oil price averaged 1620 USD/MT during the said period.

North America

The price trends in the US domestic market were in line with the global outlook. The strong demand from the downstream sectors and limited supply owing to high raw material prices, poor logistics and skilled labour shortages added to the high quotations of base oil. The base oil group II N100 grade price averaged 1950 USD/MT in the said period.

Analyst Insight

According to Procurement  Resource, the price of base oils is expected to stabilize in the coming quarter. With the release of supplies from the US and OPEC+, the supply-side constraints will soften. The current bearish market sentiments amid the stockpiling of supplies will directly impact the pricing patterns.

Procurement Resource provides latest prices of Base Oil. Each price database is tied to a user-friendly graphing tool dating back to 2014, which provides a range of functionalities: configuration of price series over user defined time period; comparison of product movements across countries; customisation of price currencies and unit; extraction of price data as excel files to be used offline.