As we know, lubricant oil is composed of Base Oil and Lubricant Additive. In 2019, the production capacity of the base oil market grew rapidly, and the base oil production ushered in a substantial growth. The contradiction between supply and demand is prominent. The price of base oil has been declined. In 2019, the price of base oil is generally low. It is predicted that the base oil price will remain low in 2020, and the market will not get better.
According to statistics, in 2019, the mainstream price of group I 150SN is 5300-7150 rmb / ton, with an average price of 6176.9 rmb / ton, down 6.15% year on year; in 2019, the mainstream price of group II 150N is 5400-7050 rmb / ton, with an average price of 6478.4 rmb/ ton, down 6.18% year on year.
It is estimated that in 2020, the main price of group I 150SN will be 5600-6600 rmb/ ton, the main price fluctuation of group II 150N (including tax) will be 6300-7000 rmb/ ton, and the fluctuation range of 150N excluding tax will be 5300-5800 rmb/ ton. At the same time, due to the abundant resource supply to restrain the upward trend of price, the distinction between the light and peak seasons of base oil in 2020 will be even less obvious. The market price of base oil may rise slightly in September, but the price of base oil will continue to decline after October.
The main reasons affecting the price trend of base oil in 2020 are as follows:
1) Raw materials
Looking forward to 2020, in terms of supply, OPEC has included expanding the scale of production reduction in the options discussed at the end of the year meeting, while EIA has lowered its forecast for the growth of us production in 2020, and the pressure on supply may be reduced compared with this year. On the demand side, it still depends on whether the global economy can improve and whether crude oil consumption can be stimulated again. It is preliminarily estimated that the average price of WTI crude oil in 2020 will be US $50-60, and the average price of Brent will be US $55-65. Initially, there is limited space for crude oil to rise in 2020, which weakens the good guiding role of domestic base oil market, lacks the ability to act on raw materials to support the price of base oil, and the price of base oil is weak and consolidated.
2) Supply side
The growth rate of domestic resource supply is relatively fast. In 2020, it is planned to add 5 million tons / year of new base oil units. The production capacity of base oil will break out in a centralized way, and the supply will increase significantly. It is predicted that the production capacity of base oil operation units will reach 17.61 million tons / year in 2020. Although most businesses set production by sales, and most base oil units maintain low load operation, the growth rate of production is still relatively fast. In terms of imported resources, with the continuous improvement of the quality of domestic base oil, the demand for imported resources may decline steadily. However, the domestic high-end lubricating oil industry still uses imported base oil as raw materials, with high brand loyalty, which is hard to be replaced by domestic base oil, and the decline of base oil import is limited.
3) Demand side
In terms of the market itself, with the upgrading of lubricating oil products, the market demand for non-standard and class I base oil is decreasing, and the demand for class II and class III base oil is increasing. The terminal demand for lubricating oil quality is constantly improving, and the demand for base oil is changing. The market demand for base oil has changed from the demand of quantity to the demand of system, and the growth rate of base oil demand is limited.
4) Macro environment
China's GDP growth began to fall from 2012, and further fell after 2019. In the second quarter, GDP growth recorded a new low since 1992. As a universal oil in the industry, the domestic industrial development status is directly fed back to the lubricant market, and the growth rate of lubricant consumption slows down. In terms of vehicle lubricating oil, according to the data of China Automobile Industry Association, from January to August, the accumulated automobile sales dropped by 11% year-on-year, the growth rate of domestic automobile ownership slowed down, the process of vehicle lubricating oil changing to "qualitative change" while pursuing "quantitative change", and the production of vehicle lubricating oil decreased and the quality improved. It is expected that in 2020, the demand of the base oil market will rise steadily, and the upgrading of the base oil industry will accelerate.
