Crude oil persists to rise despite pledges from OPEC+ and other major producers to increase supply and control crude prices. crude increased around 4$ compared to the end of 2021. The price trend of base oil and lubricant products appeared to grow at the start of 2022.
Rising prices for crude oil and raw materials will intensify inflationary pressures on many economies. At the same time, due to the coronavirus, costs are imposed on individuals and companies correspondingly. Omicron wave has not gotten to the peak in many regions. The high infection of the new variant has frightened economies in Europe, the Middle East, and Africa.
If prices of crude oil and raw materials remain in the uptrend channel, prices of products, including base oils, lubricants, and even chemicals like caustic soda will inevitably increase.
The effects of the rapid outbreak of Omicron are still unclear on the demand for base oils. Manufacturers are struggling with shortages of additives and other materials. Several factories stopped operating. Meanwhile, the consumption of base oils has lessened.
Logistics was one of the major issues at the end of 2021. But as mentioned in the last weekly report, problems seem to be easing with diminished container traffic after the holidays. Apart from transportation issues, traders also faced rising shipping rates. It was very difficult to transfer the costs to the supply chain.
Paraffin and slack wax products still have supply problems despite high demand. Former supply issues seem to exist as well.
The caustic soda market is heating up. Last week, the FOB price of Bandar Abbas was USD 600-650, which indicates the peak of its market again.
To sum up, the market is almost getting out of the stagnant state in the coming week. Demand and supply will improve as the market participants are entering.