Insight: Spain’s Cartagena exports rise

Exports of premium-grade base oils from the Spanish port of Cartagena rose in March to the highest in more than four years, adding to regional supply.

The pick-up in shipments followed a recovery in South Korea’s premium-grade base oils exports to Europe in February.

The higher volumes followed a sustained drop in Europe’s Group III base oils supplies from the fourth quarter of last year. Supply improved in January but was still lower than usual.

Premium-grade base oils exports of more than 73,000t from Cartagena in March rose from little more than 55,000t the previous month, port data showed.

The rise in shipments lifted total exports to more than 183,000t in the first three months of the year.

The volume rose from around 125,000t during the previous quarter to the highest in more than four years.

Europe’s Group III base oils prices remained unusually high relative to Group I and Group II base oils in March even with the improvement in supply from Spain.

The firm prices incentivized blenders to minimize Group III base oils consumption and to use alternatives instead such as Group II supplies or polyalphaolefins.

Prices remained elevated even with the prospect of such moves.

The price strength suggested that some blenders had less flexibility to switch to alternative feedstocks in order to continue to meet OEM lubricant approvals.

The firm prices preceded the prospect of tighter Group III supply-demand fundamentals in Europe over the coming months.

Scheduled plant maintenance in Spain in the second quarter of the year is set to coincide with maintenance work at a key refinery in South Korea.

The overlapping shutdowns were likely to cut supply from both plants over the coming months.

A drop in shipments from Spain especially would have a major impact on Group III supplies in Europe.

The country was the source for more than 30pc of Europe’s Group III base oils supplies in 2022.