The domestic base oil market performed poorly in the first quarter. New units continued to operate, supply was more abundant and demand started slowly, and resource digestion became the main theme of the market. Crude oil shocks aggravated the market's worry atmosphere, and the wait-and-see mood of base oil continued to rise.
The impact of the trend of crude oil in the base oil market in the first quarter was relatively limited. Crude oil prices fluctuated upward. The range fluctuation of WTI crude oil between 44 and 56 US dollars / barrel is difficult to have a substantial impact on the base oil market and it is difficult to change the nature of the weak supply and demand in the domestic base oil market. Downstream small and medium-sized reconciliation companies have few orders, the purchase intention is mediocre, and market transactions are sluggish.
Chinese mainstream importers have learned that although the VAT rate for base oils has dropped from 16% to 13% since April 1, although there has been a certain reduction in import costs. However, importers pointed out that as demand in most parts of Asia, except for China, began to gradually recover in February, the demand in the Indian market was even more affected by the 550,000 tons / year class II base oil installation at the Lubref refinery in the Middle East. Supply shortages caused by unexpected shutdowns and maintenance in early February have supported Asian refineries to continuously raise their spot export prices.
In the first quarter of 2019, the domestic base oil market's production capacity increased intensively, and new devices were successively put on the market. Weifang Shida Changsheng 300,000 tons / year hydrogenation tail oil isomerization dewaxing unit was put into operation, and Yellow River New Materials 150,000 tons / year base oil hydrogenation unit was put into production, and products have been put on the market. In addition, CNOOC Huizhou's 400,000 tons / year second-class base oil unit will be resumed in mid-April. At the same time, Dalian Hengli Petrochemical's 540,000 tons / year second-and-third base oil unit will also be available in April. Given that China ’s base oil demand in April may not be able to obtain favorable support in the short term, the supply side will be in a significant oversupply. The price of China's second-class base oils may continue to be in a low-level consolidation trend, and although the import costs of importers have fallen by 3% in value-added tax, this price difference has also been basically absorbed by the rise in export prices of Asian refineries. Therefore, in April Importers' losses may increase further.
In the second quarter, Dalian Hengli Petrochemical, Henan Junheng and other units will be put on the market one after another. The pressure on resource supply will further increase. The market is still dominated by digestion of resources. The continued low demand for low viscosity will further suppress the price trend. The domestic base oil market is expected to show a tepid situation in the second quarter, and trading is unlikely to improve.
The content of the article is partly taken from the Internet.