Hazy Markets of Base Oil and Lubricants

Base oil prices are experiencing calm this week across Europe, the Middle East and Africa. The Omicron variant of the coronavirus has reduced activity in markets around the world. Many countries are trying to prevent the spread of new species with new restrictions and temporary quarantines. Uncertainties continue to affect consumers’ buying interests.

Due to the approach of January and the increase in mobility and travel, there is a possibility of lockdown. The recycled base oil and lubricant market, which has been usually booming at this time of year, has stalled for the third year in a row.

OPEC agreed to increase production from a number of key suppliers in the region; therefore, oil prices have now reached a stable level over the past three weeks. Analyzes show that oil prices will fluctuate between $ 72 and $ 76 by the end of 2021. There is currently no sign of a price rise.

After nightmarish shipping problems experienced by buyers and sellers for much of the year, a legal decision was announced to cancel the closure of Mundra port to Iranian cargo on December 8. The shipping conditions appear to be improving. Shipping costs will also improve in the coming weeks, although the GRI debate continues in mid-January.

Demand in India has been stronger than expected. There has been a slowdown due to ambiguities over Omicron news but Indian buyers were confident that most grades, both from domestic suppliers and imports, were in abundance and were not under too much pressure to meet their year-end commitments.

Due to the complexity of the nuclear talks with the P5 + 1 group, the situation of the dollar in Iran has been volatile. The situation remains unclear, factories and suppliers are skeptical about pricing. Supply has outpaced demand and prices have returned to the October range, with recycled FOB oil reaching $ 650-660.

In the lubricant market, the unfavorable market conditions continue and the demand is higher than the supply. It was above $ 1000 for paraffin in the last 6 months and it continues.

Caustic Soda Flakes has been between $550 and $570 in recent weeks and has not changed significantly.

Markets are sluggish and many buyers are waiting for prices to stabilize, as crude oil prices and local cargo have also fallen. The outlook is that base oil prices will continue to decline over the next few months due to sufficient supply and availability of all grades and weak demand.