Tight Base Oil Supply Prices at Record Highs
author: Ann
2024-10-28
Behind the wave of lubricant price increases, is the base oil prices remain high. The first half of the year by raw material prices continue to push up, the second half of the year by the base oil supply decline push up. Base oil rose to the highest price in nearly 10 years, but the end market shrinkage. So, why the base oil remains high? How about the future trend?
Diesel profit-driven, tight base oil capacity
Recently, the trend of crude oil shock, high consolidation. This month, oil prices around production cuts and weak demand, the game process is more intense, the oil price amplitude is larger. Interference with the base oil market turnover mentality, under the crude oil shock, the market turnover is relatively cautious, to a certain extent, to limit the base oil upward space.
From the cost side, due to the refinery settlement is the last month crude oil prices for settlement, from the crude oil price trend, this month, the refinery refining costs slightly down, refinery profit margins to further expand. Some market participants revealed that the country in recent months in the reduction of crude oil quotas, refinery quotas can not keep up, the supply of raw materials is tight. Now the diesel market is good, large export volume, high profits, refineries get crude oil will consider high profits to do the project. Do base oil for domestic sales but also consider the cost of taxes, the natural choice not to do; although the base oil unit profits rose, the market price willingness is obvious, but by the raw materials and related products diesel oil profits, the domestic production of base oil is still difficult to improve.
Overall, in October, the domestic base oil market in favor of high upward trend is dominated by the market price upward mainly driven by supply and demand fundamentals. Tight supply, demand is still available is the main driver of the market rise. Some industry sources predicted that in November, with the weakening of demand, base oil production began to increase in the middle of next month, the start-up of more manufacturers, base oil production rebound. It is expected that the base oil will not surge in the near future, nor will it plunge, it will be high consolidation.
Refinery supply scheduling shipment and blending plant inventory low
Domestic base oil plant maintenance increased in October, the inventory is generally low, the overall tightening of supply. According to Zhuochuang information data statistics, the industry starting load in October is estimated at 38.07%, down 3.12 percentage points from the previous year. Domestic base oil production is estimated at 503,300 tons, down 5.48% from a year earlier, down 19.15% year-on-year.
From January to October, domestic production of base oil was 5,414,900 tons, down 1.24% year-on-year. 1,439,300 tons of base oil were imported cumulatively from January to September, a cumulative year-on-year decline of 14.47%. From the point of view of the total supply of resources, the total supply of base oil from January to October is expected to be 7.027 million tons, a year-on-year decline of 3.84%.In October, the inventory of manufacturers around the world is generally low, and some of the manufacturers lined up to ship, strictly speaking, the inventory is in a negative state.
From January to October, total domestic base oil demand was 7.08 million tons, up 1.64% from last year. Downstream lubricants, although many price increases, but in fact, the blending manufacturer's profit is very thin, a greater degree of constraints on the downstream blending enterprise's purchasing enthusiasm. At present, downstream blending manufacturers generally low inventory, reasonable inventory is not high. Base oil peak season demand fell back year-on-year, but the demand state from the year is still in a relatively good state.
In October, the domestic base oil market as a whole maintained a high upward trend, and the current market price of base oil 150N has reached a high level since five years. In the supply reduction, demand just demand market state, the domestic base oil market this month continued to increase, the price rose to the high level in recent years. October domestic base oil market prices, the main driving force for the further tightening of the resource supply; the overall level of demand is in a relatively good state during the year, due to the low inventory of the blending plant, just demand is the main. But the terminal market environment is weak, lubricant oil prices are difficult to accept high prices, market demand is difficult to rise significantly. Supply and demand game is the main force of the future base oil prices.
For the lubricating oil industry, high base oil prices let the epidemic tossed lubricating oil companies add to the woes. In any case, the price increase, become the only way out of the lubricating oil companies. But after the price increase, can sell, and become a test of the competitiveness of the lubricant brand products and services of the main issues.
The limerick even spit out the cost of price increases and epidemics tossed terminal downturn helplessness. "Now the price of oil is pure bullshit, up to the guys can not do; refineries will earn money at high prices, high prices are difficult to heroes".
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