Group III in over supply

[Tom NJ]

From Lube Report:

"Reflecting global oversupply, Petronas will postpone its plans to increase API Group III base oil capacity at its Melaka refinery in Malaysia, the state-owned oil company announced last week."...

"There’s no debate that the market is in an oversupply situation for higher quality Group II and Group III base oils, Agashe noted. Kline has seen that demand for finished lubes is not growing at nearly the same pace as new base oil supply, she said, especially for lower viscosity grades. “The nature of the Group III market is changing, and by 2022, Asia will be just one-third of the global supply with Europe and Middle East offering comparable amounts – hence, most of Asian Group III will have to remain in the region as the added logistical costs of shipping to Europe or North America will make them noncompetitive with local producers.”

"Furthermore, because of its viscosity range and viscosity index, Group III base stock can’t simply be forced into Group II or Group I formulations, Stephen B. Ames of SBA Consulting said. Ames forecasts that the Group III market could be in an oversupply situation of between 1 and 2 million tons for the next five years."

"Amy Claxton of My Energy concurred. “Group III capacity greatly exceeds technical demand in Asia, as evidenced by the similar prices for Group I, Group II, and Group III base oils in the region, which would be reason enough to defer,” she remarked."...

For the full story, click here: Lube Report

Tom NJ

 

[A_Harman]

I read this to mean the price for mass-market synthetics should drop over the next 5 years.

 

[SwampSurvivor]

Originally Posted By: A_Harman
I read this to mean the price for mass-market synthetics should drop over the next 5 years.


Or profits for those that produce mass market synthetics will go up.

 

[Brybo86]

I read this as "cheapo/fake synthetic demand is not as high as we acticipated so now we need to cut back our production"

 

[ARCOgraphite]

Longer change intervals due to the global death of the 3k oci?

 

[tinmanSC]

Originally Posted By: Brybo86
I read this as "cheapo/fake synthetic demand is not as high as we acticipated so now we need to cut back our production"

Why is it that every time an article about Group III oils comes up, someone as to add a "fake" argument, which is not applicable to the article? BITOG is beyond this!

 

[jrustles]

I wonder what would happen if they kept on refining it, instead of have it sitting around in tanks....

GrIII++++++?


Originally Posted By: tinmanSC
Originally Posted By: Brybo86
I read this as "cheapo/fake synthetic demand is not as high as we acticipated so now we need to cut back our production"

Why is it that every time an article about Group III oils comes up, someone as to add a "fake" argument, which is not applicable to the article? BITOG is beyond this!


LOL - doesn't bother me as much

 

[ARCOgraphite]

Originally Posted By: tinmanSC
... BITOG is beyond this!


That's Hilarious! With all the non-scientific unsubstantiated post I read daily - This is NOT a professional board.
But, At least I didn't say it this time

Brybo86: You are "Sen. Ted Cruzing" our "cause" with emotional, non relevant outbursts unrelated to the subject at hand

 

[Quattro Pete]

Originally Posted By: Brybo86
I read this as "cheapo/fake synthetic demand is not as high as we acticipated so now we need to cut back our production"

Must consumers have no idea which oil is cheapo/fake synthetic and which isn't. And really, they don't need to know it either. The few members here on BITOG that may know are in a minority as far as the entire market is concerned.

Also, most finished products are now a combination of various oil bases. The distinction is not clear cut.

 

[KenO]

Lets hope this means a drop in prices in some quality oils over the enxt few years!

 

[Garak]

When we have retailers, particularly up here, charging 100%+ markup on motor oil, the oil companies are way down on the bottom of the totem pole when it comes to blame.

 

[HTSS_TR]

Price of synthetic oil is already cheap compares with conventional oil. Currently M1, PP, VSP ... can be bought at $5/qt in $25 5-qt jug at WM, while convention oil such as PYB is $15. In the 80's and 90's conventional oil was around $1/qt and M1 was about $3-4/qt.

 

[Tom NJ]

Just FYI, to an oil blender, the cost for a Group III base oil is less than 50 cents per quart over a Group II.

Tom NJ

 

[jrustles]

Originally Posted By: Tom NJ
Just FYI, to an oil blender, the cost for a Group III base oil is less than 50 cents per quart over a Group II.

Tom NJ


This is a very good point.

 

[skellyman]

In the oil industry there is no Grp II+ nor is there a Grp III+
they only go by I - II - III -IV - V

 

[Whimsey]

Originally Posted By: skellyman
In the oil industry there is no Grp II+ nor is there a Grp III+
they only go by I - II - III -IV - V


In the mid 2000's I'm pretty sure the Schaeffer's Supreme 700 series was a mixture of
Group II+ and PAO, according to them.

Whimsey

 

[RF Overlord]

Originally Posted By: A_Harman
I read this to mean the price for mass-market synthetics should drop over the next 5 years.
Originally Posted By: KenO
Lets hope this means a drop in prices in some quality oils over the enxt few years!
...and then you woke up.

Originally Posted By: Miller88
Or profits for those that produce mass market synthetics will go up.
This.

Other than an occasional rollback at Wally's, when has the price of finished motor oil EVER dropped?

 

[Tom NJ]

Lower cost does give oil marketers seeking share increases more room for more aggressive sales, and others for more aggressive defense, although for the most part they prefer to leave prices at what the market will bear. Also some warehouse outlets claim to price on a cost-plus basis.

It all depends on the company's strategy, but if costs remain down for extended periods, competition will eventually cause a drift down in prices.

Tom NJ

 

[PandaBear]

Most likely we'll see more new cars asking for 10K OCI with synthetic grade instead, which IMO is a good thing.

 

[daves87rs]

I think prices will drop a tiny bit, or just stay the same for a while..