ILMA Compoundings September 2016 - 22

THE ARGUS ANALYSIS Spot shipments of unapproved U.S. Group II supplies to Europe also rose in the first quarter. But such shipments slowed in May and June as suppliers diverted their surplus supplies to China and India instead amid a surge in Group II demand and prices in those markets. But demand for additional Group II supplies in Asia-Pacific began to wane in June. Firmer prices for U.S. supplies then shut the arbitrage to markets in that region. U.S. suppliers subsequently redirected surplus Group II base oils to the European market in early July. More Group III Supplies Arrive While the steady flow of Group II and Group I exports kept those markets relatively balanced through July, the Group III market has instead faced a surge in imports. Expectations of rising demand, plus higher Group III prices in the North American market compared with other markets, attracted interest in moving to the region surplus supplies with and without approvals. The firmer Group III prices also boosted buying interest in lower-priced premium-grade supplies without approvals among blenders with the flexibility to use such supplies in their lubricant formulations. A wave of Group III light- and mid-viscosity with limited or no approvals from several new supply sources subsequently reached the U.S. in July. A 10,000-ton cargo of Group III 4cst and 6cst from a new plant in the Mideast Gulf arrived in the U.S. Gulf Coast in mid-July. The premium-grade supplies will be distributed from there. A small volume of Group III 4cst base oils from Russia also reached the U.S. in mid-July. UNIAROM® aromatic solvents UNIPAR® S aliphatic solvents UNIPAR® SH aliphatic solvents UNIPAR® paraffinic base oils UNIPAR® paraffinic process oils UNINAP® naphthenic base oils UNINAP® naphthenic process oils UNISHIELD® inhibited transformer oils Asphalt and other specialty products 40 Shuman Blvd. ,Suite 290 Naperville, IL 60563 PHONE: 630-470-6030 orders@unisource-energy.com www.unisource-energy.com Another 10,000-ton shipment of premium-grade light- and midviscosity supplies from the Mideast Gulf is set to arrive in the U.S. this month. These premium-grade supplies with limited or no approvals were offered at steep discounts to Group III supplies with approvals. Looking Ahead to Year-End The U.S. market faces the prospect of more such surplus availability in the fourth quarter, at a time of year when demand typically slows. More Group III light- and mid-viscosity supplies will be in circulation by then. New supplies of Group I Bright Stock will also be commercially available from this month. A lighter round of planned maintenance is expected in the fourth quarter. Only one major Group II refinery will have a turnaround in October. The maintenance work will mostly affect the refiner's export shipments to Europe. But a continuation of recent and regular moves to export surplus volumes could limit a supply-build at that time. A motor fuels supply glut could also affect base oils production. Unusually weak gasoline and diesel margins in July prompted U.S. refiners to eye run cuts to reduce the overhang. Such moves could also reduce base oils output. Some refiners in the U.S. Atlantic Coast, including one with a base oils unit, trimmed their crude runs in July. The growing gasoline supply overhang raised expectations of larger run-cuts after the end of the summer driving season. But refiners in the U.S. Gulf Coast were less inclined to cut run-rates in July. They instead opted to curb the overhang by changing their product output. Stronger base oil values relative to competing fuels prices incentivized refiners to boost base oils production. Some U.S. Gulf Coast refiners began to divert their feedstock away from the distillates stream in a move to reduce diesel output and to increase base oils production. Any further run-cuts in the U.S. Northeast that reduce base oils output in the near future could be offset for now by increased base oils production in the U.S. Gulf Coast. But more moves to cut the motor fuel overhang after the end-of-summer driving season could spur more widespread production cuts. Molina is U.S. base oils reporter for Argus Media. She may be reached at 713-360-7560 or eva.molina@argusmedia.com. Linking Customer's Needs with Refiner's Quality Vol. 66 No. 9 * 22 * September 2016 Compoundings http://www.unisource-energy.com

Table of Contents for the Digital Edition of ILMA Compoundings September 2016

FROM THE CEO
BOARD BRIEF
NOTES FROM MSCI
THE HEART OF ILMA
THE ARGUS ANALYSIS
VOICES & VIEWS
INTERNATIONAL INSIGHT
SPEAKER SPOTLIGHT
FAMILY BUSINESS
FINANCIAL FREEDOM
RULES & REGS
POWER PLAY
LEGAL EASE
THE WHITE PAPER
ADVERTISERS INDEX
ILMA Compoundings September 2016 - 1
ILMA Compoundings September 2016 - 2
ILMA Compoundings September 2016 - 3
ILMA Compoundings September 2016 - 4
ILMA Compoundings September 2016 - FROM THE CEO
ILMA Compoundings September 2016 - 6
ILMA Compoundings September 2016 - 7
ILMA Compoundings September 2016 - 8
ILMA Compoundings September 2016 - BOARD BRIEF
ILMA Compoundings September 2016 - 10
ILMA Compoundings September 2016 - 11
ILMA Compoundings September 2016 - 12
ILMA Compoundings September 2016 - NOTES FROM MSCI
ILMA Compoundings September 2016 - 14
ILMA Compoundings September 2016 - THE HEART OF ILMA
ILMA Compoundings September 2016 - 16
ILMA Compoundings September 2016 - 17
ILMA Compoundings September 2016 - 18
ILMA Compoundings September 2016 - 19
ILMA Compoundings September 2016 - 20
ILMA Compoundings September 2016 - THE ARGUS ANALYSIS
ILMA Compoundings September 2016 - 22
ILMA Compoundings September 2016 - 23
ILMA Compoundings September 2016 - VOICES & VIEWS
ILMA Compoundings September 2016 - 25
ILMA Compoundings September 2016 - INTERNATIONAL INSIGHT
ILMA Compoundings September 2016 - 27
ILMA Compoundings September 2016 - SPEAKER SPOTLIGHT
ILMA Compoundings September 2016 - 29
ILMA Compoundings September 2016 - FAMILY BUSINESS
ILMA Compoundings September 2016 - 31
ILMA Compoundings September 2016 - FINANCIAL FREEDOM
ILMA Compoundings September 2016 - 33
ILMA Compoundings September 2016 - RULES & REGS
ILMA Compoundings September 2016 - 35
ILMA Compoundings September 2016 - POWER PLAY
ILMA Compoundings September 2016 - 37
ILMA Compoundings September 2016 - LEGAL EASE
ILMA Compoundings September 2016 - 39
ILMA Compoundings September 2016 - THE WHITE PAPER
ILMA Compoundings September 2016 - 41
ILMA Compoundings September 2016 - ADVERTISERS INDEX
ILMA Compoundings September 2016 - 43
ILMA Compoundings September 2016 - 44
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