Intricacy in Base Oil and recycled Base Oil Supply

The market for base oil and recycled base oil is facing insurmountable supply problems. The global base oil industry is also facing challenges. Refineries are unable to meet their planned commitments due to high demand. Prices inevitably continue regularly every month or two months by some vendors.

Currently, the FOB price of recycled base oil has reached $ 680 and it seems that the upward trend will continue.

• Current factors affecting the supply of base oils are:
• Limited production due to declining refinery operations since 2020,
• Covid-19 status in the last 12 months,
• Shortage of raw materials for the production of base oils,

The crude oil price has reached its peak. Some major producers, such as Saudi Arabia and Russia, are restricting the supply of crude oil to markets that are recovering from the Covid epidemic. Due to geopolitical tensions in Eastern Europe and OPEC+’s reluctance to increase crude oil production, its prices have reached a seven-year high and appear to be very sensitive to reports from Russia of a possible attack.

Several unexpected events, such as the fire at a Taiwanese factory in late January and the increase in Omicron cases in several countries - which led to a reduction in labour at manufacturing plants, vessels, and ports - have also affected supply trends.

Transportation continues to be hampered by a shortage of vessel space and surging freight charges. Recent struggles with India's customs and shipping lines have also compounded market conditions.

The price of caustic soda FOB has reached about $ 750 and supply problems for this product continue. 

This article was prepared by Tina Taghavi, the account manager of Infinity Galaxy. (www.infinitygalaxy.org)