Stable Lubricant and Base Oil Market with The Chance of Growth

recycle market
October 20, 2021
3 minutes

Significant consequences of the Covid-19 epidemic continue to affect the markets of base oils, lubricants and recycled oil. Demand in the market has not yet recovered and oil products, especially fuel, have not been much attractive.

In the base oil market, production has been restricted due to limited raw materials. Meanwhile, most refineries in the market are returning to pre-corona rates instead of declining output.

Logistics issues, congestion of ports and shortage of energy resources continue to affect the supply chain and trade routes in the market. Some producers have been forced to either reduce or stop production until conditions improve.

In China, coal shortages have reduced production at power plants. Many plants have been forced to cut production rates due to a lack of energy.

International base oil producers have chosen not to ship their products to China. Meanwhile, the demand for base oil has also decreased in this country. In the current situation, as mentioned in the last weekly reports, the market participants have met most of their needs with domestic production. However, this reduction is partly due to the seasonal pattern and restrictions imposed by the Chinese government to control COVID-19. There are still logistical problems and congestion in Chinese ports, and vessels are still unable to load or unload cargo.

China was not the only major market influencer that faced the crisis. The Indian market was also on the brink of an economic crisis regarding power shortage. With the Covid-19 epidemic and the decline in industrial activity, energy shortages have had a devastating effect on the manufacturing sector. Meanwhile, the market demand for industrial lubricants has been also affected by the slowdown in production. This is the reason for the increase in the value of many chemicals and additives, as well as the problems in their preparation. Imports have also been affected due to shipping disruptions and longer delivery times. Recycled base oil demand is recovering in the Indian market. Market Signs indicate the prices of recycled base oil in the Iranian market will increase to about $ 30-40 / MT this week.

Crude oil prices have risen sharply over the past two weeks, putting unexpected pressure on some major economies that remain under COVID restrictions. However, the demand for crude oil and its petroleum products has been strong. Crude oil producers are determined not to allow any production increase to intervene with the price growth. OPEC+ meets on November 4th to decide on the December production plan. Following the improvement in demand and the sharp rise of oil prices, the group appears to be facing members asking for an increase in production.

Now that the cold season has started, everyone is confident of rising fuel and energy prices with the price index reaching more than $80.

Markets generally have seen steady prices after rising in recent months. Although, there have been predictions that prices of raw materials would rise sharply following the recent crude hikes. These factors may put more upward pressure on prices. One might be recovering the rising costs of production. However, the markets of base oils, lubricants and recycled oils can be described as stable at the present. However, the possibility of an increase in the near future cannot be ignored.

This article prepared by Tina Taghavi, The account manager of Infinity Galaxy. (www.InfinityGalaxy.Org)

 

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