Warnings on Trading Substandard Oil Instead of Recycled Base Oil

In recent weeks, supply constraints have been a concern for the recycled base oil market. As mentioned in Infinity Galaxy last week’s recycled article, legal barriers for the production of this product and the ongoing shortage of raw materials are among the main reasons for this issue.

Oil prices are fluctuating on a scale above $70. As Infinity Galaxy mentioned in Friday’s bitumen weekly report amid possible scenarios in the prevailing state, the scenario of an upward trend with a 65% growth possibility in rates is more likely. Despite the onset of the monsoon and the heavy rainy season in the equator, rising oil prices have boosted demand for recycled and base oils.

Meanwhile, Iranian high-quality recycled oil has become rare in the market. The reports indicate that a large amount of oil-based product, that contains iso recycle compounds, has been stocked in Bandar Abbas. This material is being traded at lower prices under the name of recycled base oil but due to its high acidity and high corrosive properties; its color will change drastically from yellow to black over time. Therefore, it cannot be used as recycled oil in any way. The substance, which is also an environmental pollutant, is sold as recycled oil in the current lack of supply.

Rising oil prices have also boosted demand for paraffin, slack wax, and other petroleum-based products, which has led to further price hikes of these products. Production restrictions still exist in the paraffin market and manufacturers don’t have any interest in expanding production.

Several variables affect the overall market conditions, including the Iranian presidential election, the parity of USD against the Rial, and crude oil price.

The market is facing production constraints, rising prices, and high demand. Moreover, you may find every quality at different prices in the market. In the current situation, Infinity Galaxy recommends that traders stay more cautious about the authenticity of the Suppliers and the traded products before sealing any deals. In the situation that the market is facing a lack of supply, traders require more precision and sensitivity in their deals.

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