Forecast for global bright stock prices “unusually firm”
Argus Media is forecasting global bright stock prices to remain “unusually firm” over the coming months.
Argus said this is supported by “tightening structural supply” of bright stocks, a heavy grade of Group I base oil primarily used in industrial, as well as in marine, lubricant formulations.
Due to numerous Group I base oil refinery closures in recent years, supply of bright stock has been dwindling, but direct substitutes for formulations requiring bright stocks are not so easy as with light viscosity grade Group I base oils, which are used in automotive lubricant formulations.
Argus said the relative price strength of bright stock coincides with the imminent closure of several Group I base oil plants in the Netherlands, following the closure of other Group I base oil plants in France, South Africa and Taiwan during the past 18 months.
“The volume of such closed bright stock production capacity will far outweigh the increase in capacity in some existing and expanded plants. The price strength of bright stock is already reflecting this growing shortfall,” Argus said.
However, outright bright stock prices are expected to ease through to the end of the year on the back of a seasonal slowdown in demand, especially in Asia-Pacific markets like China, Argus said. “But the size of the price drop is expected to be small because of the product’s already unusually strong premium relative to Group I heavy neutral base oils and diesel,” Argus said.