Base oils prices
Base oils prices – The COVID-19 pandemic has unleashed a long and large global surge in base oil prices as well as profit margins. In the summer of 2021, base oil refining gross margins increased between two and five times depending on grade and geographic region.
Since then, however, prices and margins have stabilized and, in some cases, retreated, raising questions about the market’s direction as the world waits to emerge from the health crisis. Some analysts and market experts predict it will return to where it was before the pandemic – a chronic overcapacity that has put downward pressure on prices and squeezed margins.
There is broad agreement that one of the main drivers for the increase in base oil prices has been a restriction in the availability of raw materials used to make base oils.
Demand for finished lubricants – and therefore base oils – also dropped initially, but then began a gradual recovery that outpaced the recovery for fuels. Without enough raw material to keep up with demand, shortages developed for all types of base oils in all regions and price increases accelerated.
In the summer of 2021, base oil prices, depending on location and grade, have risen approximately between 58% and more than 200% since before the start of the pandemic, according to price data presented by Lubes’n’ magazine. Greases.
Gross refining margins increased, more than doubling in North America, more than tripling in Asia and increasing between three and five times in Europe.
Analysts say the price rally has ended because fuel demand has finally recovered enough for refiners to restore operating rates close to pre-pandemic levels. Furthermore, with restrictions on raw material supply largely removed, some predict that the large surplus in base oil production capacity, which continues to increase, will again become a major factor in prices and profit margins.
