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Group II exports from the United States (it is assumed that the trade flows represent largely Group II, as Group I exports would not make economic sense) to EU-28 exploded after Chevron’s Group II plant in Pascagoula started commercial production. A similar trend is seen in the Group III imports by the United States from the Middle East. With new capacity addition, Group III imports to the United States have grown. Continued growth in these trade flows will depend on demand growth and supply creation in the destination markets. Europe will see a new Group II plant in 2019. It remains to be seen what the impact will be on Group II exports to the region. Similarly, if the United States gets a Group III plant, this could impact the current flow of Group III to the country. Group III/III+ Basestocks Imports by the United States, 2007 to 2018

Market Structure Is Changing The divergence of supply and demand trend lines increases the surplus and makes the basestocks market a buyers’ market. In addition, increasing lubricant quality and proliferation of specifications means that blenders require a wide variety of basestock to blend their products, which also allows them to cater to niche markets, such as bio-sourced or re-refined basestocks. As a result, vertical integration between basestocks manufacturing and lubricants blending does not make sense any longer. Between 2007 and 2017, basestock plants that can be classified as being largely merchant suppliers increased from 64 to 72, with an incremental basestock capacity of 10 million tonnes. In the same period, vertically integrated plants fell from 52 to 38. An increasing number of merchant marketers increases competition in the basestocks market and adds to the price-driven competition. This is also the period that saw growth in the number of independent lube blenders in various growth markets around the world. The proliferation of synthetic and semi-synthetic lubricant products from different categories of lube marketers is a testament to this change.  www.klinegroup.com

“Between 2007 and 2017, basestock plants that can be classified as being largely merchant suppliers increased from 64 to 72, with an incremental basestock capacity of 10 million tonnes. ”

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Kline Perspectives 2019