Base oils and waxes
Overview
As the world pivots towards decarbonisation, challenges and opportunities loom for base oils production and demand. Staying on top of this market is more important than ever to realise these opportunities and mitigate pricing risk.
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Latest base oils and waxes news
Browse the latest market moving news on the global base oils and waxes market.
US lube industry wary of tariffs uncertainty
US lube industry wary of tariffs uncertainty
London, 13 March (Argus) — The uncertainty around US tariffs could weigh on demand for finished lubricant and base oil, trade body ILMA told Argus . US President Donald Trump has decreed a 25pc tariff on steel and aluminium imports from Canada, a key import source for these materials used in auto manufacturing. The US sources about 70pc of its aluminium imports and around 23pc of its steel imports from its northern neighbour. ILMA chief executive Holly Alfano said the White House recognises that the uncertainty surrounding tariffs "creates a challenging business environment". "A slowdown in auto sales and production due to tariffs could lead to reduced demand for these products," Alfano told Argus. "Manufacturers may postpone investments or expansion plans due to unpredictable costs and market conditions," she said. "If vehicle prices rise due to increased production costs, consumer demand may decline, leading to further reductions in automotive output and associated lubricant consumption." Automotive vehicle production forecasts have fallen to 15.5mn in 2025 since the tariff announcement, down by 250,000 vehicles from the prior estimate by AutoForecast Solutions. This would put output broadly in line with 2024 , stifling growth in finished lubricant demand. US government data show car sales fell by 5pc in 2024, and finished lubricant sales dropped 6pc over the same period. Although lubricant sales are not entirely correlated with new car sales, Alfano noted the auto sector is "a significant consumer of finished lubricants". As it stands the tariffs on steel and aluminium will not now be implemented until 2 April. The White House has said this is to "allow for the flow of parts and sub assembly products into America, to allow American car manufacturers to continue building cars." The US administration is scheduled to host Canadian and Ontario officials today to discuss a possible easing in tariffs. If these talks yield no progress, and if a month is insufficient for supply chains to be reorganised, the tariffs could stunt automotive manufacturing and in turn lubricants needed for these new vehicles. Ontario premier Doug Ford has cautioned the 25pc tariffs could halt the auto manufacturing industry in as little as 10 days. While the US is self-sufficient in terms of its Group II base oils, it is a net importer of Group III, with only 4pc nameplate capacity, and both are key to automotive lubricant production. The US is an importer of Canadian Group III base oils from Petro-Canada's 4,000 b/d plant in Mississauga, Ontario. By Gabriella Twining Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Chevron to produce Group III+ base oils in US
Chevron to produce Group III+ base oils in US
London, 12 March (Argus) — Chevron said it will begin Group III+ base oils production in the US, becoming the first domestic producer of these grades in North America. The Group III+, named NEXBASE 4 XP, will be produced at Chevron's 25,000 b/d base oils plant in Pascagoula, Mississippi, from the fourth quarter of 2026. Chevron will join Malaysian state-owned Petronas and South Korean Producer SK Enmove as the only global producers of Group III+, and could compete with these for market share in North America. "NEXBASE 4 XP will be globally available, starting with hubs across Europe, which will help customers optimise supply logistics and costs," said Chevron base oils general manager Alicia Logan. Use of Group III+ base oils in premium grade lubricants is rising as equipment manufacturers seek to meet the latest engine approvals. The new production will add to Chevron's portfolio of Group II, Group II+ and Group III base oils. Chevron in 2022 acquired Finish refiner Neste's Group III business , including 250,000 t/yr of Group III nameplate capacity from Finland's 197,000 b/d Porvoo refinery and 180,000 t/yr or 45pc of base oil nameplate capacity from Bahrain's 262,000 b/d Sitra refinery through a joint-venture agreement with Bapco. By Gabriella Twining Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
US Group II base oil margins rise on firm demand
US Group II base oil margins rise on firm demand
Houston, 4 March (Argus) — Domestic Group II base oil margins rose for the week ended 28 February as spot prices increased on the back of firmer seasonal demand. The Argus Group II N100 premium to four-week average low-sulphur vacuum gas oil (VGO) rose to $1.01/USG from 98¢/USG last week. Margins remained above year-earlier levels of 86¢/USG. The Argus Group II N100 premium to four-week average US Gulf coast (USGC) diesel was 75¢/USG, up from 74¢/USG the week prior. Margins remained above year-earlier levels of 44¢/USG. Domestic Group II light-grade spot prices edged up on firmer demand from seasonal factors. Demand typically picks up leading into the summer because of increased driving activity. Supplies also tightened as Chevron is planning a 3-4 week turnaround at its 25,000 b/d Group II base oil unit in Pascagoula, Mississippi, in March and April. Four-week average VGO prices rose on reduced supply availability, which is partially attributed to multiple refinery turnarounds. Several turnarounds are expected to wrap up by the end of March and ease some constraint on VGO volumes. The low-sulphur VGO premium to four-week average WTI crude widened to $17.49/bl from $16.78/bl last week. Weaker diesel and gasoline markets are keeping VGO margins depressed. This is pushing more VGO toward base oil production. By Karly Lamm Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Retaliatory tariffs could weigh on US base oil exports
Retaliatory tariffs could weigh on US base oil exports
London, 4 March (Argus) — Canada's retaliatory tariffs on US imports such as cosmetics, motorcycles and rubber tyres are also likely to affect Canadian demand for US finished lubricant and naphthenic base oils. Canada has imposed 25pc tariffs on $30bn worth of US imports, to be followed by another $125bn of imports in three weeks, in response to the US slapping a 10pc tax on energy imports from Canada and a 25pc tariff on non-energy imports. The US tariffs took effect at 12:01am ET (05:01 GMT) on 4 March. The first round of Canadian tariffs will affect cosmetics and motorcycle imports from the US. It will likely have a knock-on effect on the process oils market as well as finished lubricant demand, as these products are key to cosmetics production and the performance and maintenance of motorcycles. The Canadian tariffs extend to rubber tyres for motorcycles, passenger cars, and heavy duty and agricultural vehicles, which could weigh on demand for naphthenic base oils as they are used to manufacture rubber tyres. The second wave of Canadian tariffs is expected to cover passenger cars from the US, further weakening finished lubricant demand. Canada is a net importer of base oils and lubricants from the US, but is also one of the biggest exporters of those products into the US. Two of the largest Canadian base oil and lubricant plants are in the eastern province of Quebec and frequently target the US northeast and midcontinent. If base oil and lubricant trade flows between the US and Canada slow down, market participants expect more Canadian product to move into western Canada and surplus volumes to target Europe. Canada is mostly dependent on the US for its base oils and, in turn, its finished lubricant production. It has an estimated nameplate base oil production capacity of 1mn t/yr, compared with 10.8mn t/yr in the US. Canada has not placed direct tariffs on US base oils yet, and it is unclear whether it will extend them to include all energy commodities. The US is a net exporter of Group II base oils, with exports mostly targeting Mexico, Canada and Europe. If tariffs on US base oils are imposed, the US would have to target more competitively-priced regions such as India, the Mideast Gulf and west Africa. The US could also be forced to increase exports to South America, which would weigh on US export spot prices. The Mexican government has said it will announce retaliatory tariffs on 9 March. Base oils markets are unlikely to be affected in the short term as Mexico depends on the US for 90pc of its imports and has no domestic base oil production. Applications for new import permits to Mexico take 1-2 months to obtain, which would support US imports in the meantime. Furthermore, bulk availability out of Asia and Europe is limited amid a heavy round of refinery maintenance in the first half of 2025. By Gabriella Twining & John Dietrich Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
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