Generally, the Covid-19 epidemic continues to have a significant impact
on the markets for base oils, lubricants, and recycled oil. The market has not yet recovered, and oil products, particularly fuel, have not been particularly appealing.
To be more specific, production has been limited in the base oil market due to a scarcity of raw materials. Meanwhile, rather than decreasing
output, most refineries in the market are returning to pre-corona rates. More specifically, logistics issues, port congestion, and a lack of energy
resources continue to wreak havoc on the market’s supply chain and trade routes. Until conditions improve, some producers have
been forced to reduce or stop production.
Stable Lubricant and Base Oil Market
Moreover, Coal shortages in China have lowered power plant output. Due to a lack of energy, many plants have had to reduce their production rates.
Base oil producers from around the world have decided not to ship their products to China. Meanwhile, in this country, demand for base oil
has decreased. As mentioned in the previous weekly reports, market participants have met most of their needs with domestic production in the current situation.
Notwithstanding, this decrease is due in part to the seasonal pattern and
Chinese government restrictions on COVID-19 control. In Chinese ports,
there are still logistical issues and congestion, and ships cannot load or
unload cargo. It’s also worth noting that China wasn’t the only major
market influenced to be hit by the downturn. The Indian market was also
on the verge of a power shortage-related economic crisis. Energy shortages
have wreaked havoc on the manufacturing sector, thanks to the Covid-19 epidemic and a drop in industrial activity. Meantime, the slowdown in
production has had an impact on market demand for industrial lubricants. This is the cause of the rising cost of many chemicals and additives,
as well as the difficulties in their manufacture.
Imports have been harmed as a result of shipping delays and longer delivery times. In other words, in India, demand for recycled base oil is increasing.
We expect the price of recycled base oil in the Iranian market to rise to around $30-40 per MT this week, according to market indicators.
Crude oil prices have risen sharply in recent weeks, putting undue strain
on some major economies that are still subject to COVID restrictions. The
demand for crude oil and petroleum products, on the other hand,
has been strong. Additionally, Crude oil producers are adamant about
not allowing any increase in production to stifle price growth. On November 4, OPEC+ will meet to decide on the December production plan. Following an increase in demand and a sharp rise in oil prices, the group appears to be
facing demands from members for more production. As the ultimate point, with the start of the cold season, everyone expects higher fuel and energy
prices, with the price index exceeding $80.
