Sharp Price Increase Has Evoked the Market

Various factors have affected the market last week. changes in the base oil, lubricant, and recycled base oil market were mixed up. While some grades had increased, some fell or got out of the competition.

Demand is rising, especially from the Indian market. Fuel prices in this country are rising steeply, which is further due to steady price rise despite the increase in supply in recent weeks.

In the base oil market, rising supply and seasonal decline have put downward pressure on current prices while demand still exists. Buyers do not seem to be much eager to find suppliers for this product as in the first half of the year.

The recycled oil market, which has been experiencing stable and calm conditions in recent weeks, is growing again. Buyers, who have been waiting for prices to fall, seem to be returning to the market as they see a resurgence.

Logistics issues in the second half of the year are one of the main problems affecting markets and businesses around the world. Factors such as port congestion, lack of containers, shortage of vessel space due to previous COVID-19 restrictions, and labor shortages remain. Adani Logistic problems at the port of Mundra and shipping problems to India also have pushed shipping costs to their highest level in two years. Raw material shortages and supply chain disruptions, as mentioned in previous weeks, have also affected production operations around the world. Some o these issues also affect the consumption of lubricants.

In major markets, China and India, energy shortages have exacerbated problems. China's port congestion has continued, and many base oil suppliers have been hesitant to trade with China due to transportation logistics ambiguities. Despite energy shortages, China and India's demand for diesel has risen and led to higher diesel prices. The sharp rise in mobility, after lifting travel restrictions, has forced traders to buy gasoline from the international market. This has led some refineries in these two regions to prefer diesel production to other refined products such as base oils.

In India, demand for paraffin and lubricants remained strong before the traditional festival season. Despite rising crude oil prices, sellers were now hoping to make higher profits.

Brent crude, which is backed by high demand from the US, the world's largest consumer of oil, remains above $85. Forecasts also show further growth of the global demand in the winter.