HF Sinclair's planned closure of its Mississauga refinery removes one of North America's few domestic Group III producers, increasing the importance of replacement capacity arriving on schedule
Canada became an even more important supplier after Middle East disruptions curtailed Group III exports, with the US relying increasingly on alternative sources
The impact of the closure would depend on whether new Group III projects start as scheduled before the Ontario plant exits the market, or whether delays prolong the current supply squeeze
HF Sinclair's decision to retire its Mississauga base oils refinery has increased the importance of a wave of new Group III projects arriving on schedule, with fresh capacity needed to replace one of North America's few domestic sources of premium-grade supply.
HF Sinclair expects to retire the refinery during 2027 while retaining the Petro-Canada Lubricants brand and lubricant blending operations.
The Ontario refinery, acquired from Suncor in 2016, is Canada's largest base oils producer, and one of North America's largest Group III producers.
The planned closure comes at a time when global Group III markets are unusually tight.
The US imports most of its Group III supply, with the Middle East accounting for more than 40% of imports during 2024 and 2025 before shipments slumped following disruptions that began in late February.
As Middle East supplies collapsed, Canada became an increasingly important alternative supplier.
Shipments from Canada reached 24% of total US imports by May 2026, up from an already-high 21% during 2025 and 12% in 2024.
US Group III prices more than tripled since early March amid tightening supply and growing competition for the same scarce cargoes.
"We're not unmindful of where the market is," Chief Executive Officer Franklin Myers said during the company's earnings call. "Not being unmindful of the market today, we also recognize that there are a number of base oil suppliers who are increasing capacity around the world with a lower cost environment than what we have in Mississauga."
Market Repercussions
The closure shifts greater attention to whether new Group III capacity starts on schedule.
Chevron's Pascagoula plant is due to start Group III+ production in the fourth quarter of 2026, while ExxonMobil's Baytown expansion is not due until 2028.
Overseas, Luberef's expanded Yanbu unit is set for start-up later this year, and Hyundai Shell Base Oil plans Group III output in 2027. The new capacity would follow the start-up of new Group III production in India late last year.
The smooth startup of those projects and a recovery in Middle East exports would comfortably replace Mississauga's output.
Any delays to those projects would leave the Mississauga closure removing capacity before replacement barrels arrive, extending the current squeeze in global Group III supply.