ARGUS US GROUP I SN 150 & GROUP II N100 VS VGO ($/USG) Argus US SN 150 minus VGO 4-week average Argus US N100 minus VGO 4-week average $0.75 $0.70 $0.65 $0.60 $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 Apr 2016 Jun 2016 UNPLANNED SHUTDOWNS ADD TO U.S. TIGHTNESS Unexpected refinery shutdowns in Qatar and Japan also added to the tightness of Group III and Group I base oils in the Americas. A large volume of U.S. Group I supplies began moving to Asia-Pacific after a fire at a major Group I refinery in Japan in late January. This helped to clear the lingering surplus of heavy neutrals and bright stock in the U.S. Gulf coast, but also led to a drop in the availability of such volumes to Mexico. The extended shutdown of a plant that produces premiumgrade base oils in Qatar has rippled through the global market. The reduced output from this plant has tightened the availability of premium-grade base oils and finished lubricants in the North American market. A major blender that uses supplies from this plant in some of its formulations put on allocation some of its premium-grade automotive engine oils from early March. The blender restricted volumes of a few of its full-synthetic and synthetic-blend passenger car and heavy-duty diesel engine oils. The allocation is expected to stay in place in the North American market through mid-2017 as the plant has extensive repairs. Aug 2016 Oct 2016 Dec 2016 Feb 2017 The major blender has needed to secure a large volume of approved and semi-approved Group III base oils from other producers to supplement these supplies. This has absorbed most of the surplus supplies of approved and semi-approved Group III base oils from the U.S. market. CONCLUSION Supplies of paraffinic base oils are expected to remain tight through the second quarter of 2017. U.S. base oils prices are forecasted to continue rising and to peak in June, according to the February issue of Argus Base Oils Outlook. Prices are expected to gradually ease in the second half of the year as supplies become more readily available. Availability of spot supplies is not likely to improve until the round of Group II refinery maintenance concludes in June. But the refineries in Japan and Qatar are expected to continue to run at reduced rates and to absorb surplus Group I and Group III supplies from the Americas. Molina is the editor of Argus Americas Base Oils. She can be reached at 713-360-7560 or eva.molina@argusmedia.com. 17