Early in the week, U.S. President Donald Trump reversed some of his tariff-related policies to reduce their impact on automakers. For example, car companies paying 25% tariffs on auto imports will not be charged other levies, such as those on steel and aluminum, or on certain imports from Canada and Mexico, Reuters reported. However, the rules do not appear to shield automakers from tariffs on steel and aluminum that their own suppliers were expected to pay and transfer down the supply chain.

Analysts have already projected that the cost of new vehicles sold in the U.S. could rise by $1,000 to $9,000 per vehicle, with some explaining that layering tariffs without refunds or exemptions known as duty drawbacks – would mean tariffs could cause more harm to the auto industry than a United Auto Workers strike, the – Detroit Free Press reported. The tariffs would also put many automakers and their suppliers at a higher risk of financial failure. Industry experts predicted that at least 700,000 fewer vehicles would be sold in the U.S. this year due to recession fears, production disruptions and steeper vehicle prices amid the ongoing trade war. In 2024, sales of new light vehicles in the U.S. totaled 16.1 million units, 61% of which were manufactured locally, according the data from JATO, a leading supplier of automotive market intelligence.

Meanwhile, base oil producers were counting on filling a steady stream of orders ahead of the start of the summer driving season. Some acknowledged that the order volumes were lower this spring than in the past few years, but this trend was noticeable even before the tariffs, sources said. Many other factors appeared to play a role, such as longer drain intervals in new car models and reduced miles driven after the COVID-19 pandemic because many employees continued to work from home.

While electric vehicle sales were also mentioned, they were not seen as major disruptors in terms of lubricant consumption. EVs still need specialized lubricants and greases for various components like gearboxes, bearings, and thermal management systems, and these vehicles do not make up a large portion of the U.S. car fleet yet. Analysts have said that the impact that a growing EV fleet will have on PCMO demand will be significant, but likely not devastating for lubricant manufacturers. 

A majority of base oil suppliers have been bracing for a drop in demand from the PCMO segment, but some were surprised to be placing more volumes than anticipated. “We were hearing the same thing about demand, but it’s not showing up in our numbers, particularly for API Group II and Group III which are most impacted by PCMO,” a source noted.  

The supply and demand ratio varied according to each base oil category, with some grades within the Group I and Group II segments described as tight, while other base oils such as the Group III cuts deemed more balanced. Snug conditions in some of these segments offered support to current posted prices and partly offset pressure from lower crude oil and feedstock values. Comfortable margins encouraged producers to run plants at full rates.

Within the Group I category, the SN150 and SN500 grades and bright stock continued to command much attention as demand remained firm and availability strained on reduced global output and plant turnarounds. These conditions catapulted prices to higher levels during the week. However, domestic demand has weakened because of a general slowdown in the industrial segment, particularly for metalworking fluids, sources said. This was attributed to current uncertainties affecting these sectors.

Tight Group I supplies in Europe and Asia following permanent plant closures in recent years, including the most recent ones in Italy and Japan, have prompted buyers and traders in those regions to look for product in the U.S., particularly bright stock, which was priced below products in those regions. However, given plant maintenance at domestic plants and ongoing contractual demand, there were few sizeable U.S. cargoes available for spot export transactions, although some deals managed to be concluded to Europe, according to sources.

Demand for U.S. Group I and Group II declined in Mexico due to economic uncertainties triggered by the new tariffs, particularly those related to automotive and industrial production. There were also fewer concerns about tariffs on base oil imports as it appeared that base oils might be exempt under the United States-Mexico-Canada Agreement (or USMCA).

There were expectations of an uptick in buying appetite from Brazil as current inventories were being depleted, even those extra volumes that became available following a fire at lubricant manufacturer Moove’s facilities back in February. However, there was still sustained interest for locally-produced Group I base oils, while some offers for U.S. Group II cuts were deemed too steep. Meanwhile, Moove was heard to be importing lubricants from Europe, the U.S. and neighboring countries to supply existing customers and protect its market share.

Most Group II grades were snug in the U.S. because of reduced production levels given recent and ongoing plant turnarounds. The light grade N100 was particularly tight, and this has resulted in a small increase in spot and export pricing. However, the restart of Chevron’s plant in May and of other producers’ units over the next few weeks was expected to relieve some of the supply constraints.

Chevron started a three-to-four-week turnaround at its Pascagoula, Mississippi, Group II plant this month and had been anticipated to build inventories to cover contractual obligations during the outage. Market sources said that the company seemed well-prepared on inventory, and that Chevron’s Richmond plant was also running well after its turnaround last October. There was no producer confirmation about the turnaround since the company does not disclose details about its plant operations.

Ergon shut down its Group I/Group II base oil unit in Newell, West Virginia, for approximately seven weeks on March 31 as the producer is implementing several reliability improvements. The company said that no supply interruptions were expected for current ratable customers.

Excel Paralubes was also heard to be preparing inventories as it was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, in the second half of the year. The plant has been running at reduced rates due to technical issues related to Group III production at the facility, according to market sources, but contractual obligations continued to be met.

There were also reports that Group I/Group II producer Calumet was rebuilding stocks following a turnaround in March.

Similarly, in the Group III segment, reduced output at domestic plants and maintenance in different regions have led to a constrained global supply scenario. This has helped suppliers maintain values, but participants said that there was a wide range of pricing in the U.S. market, with some imports that lacked certain approvals being offered at significantly lower levels.

There continued to be concerns regarding tariffs affecting base oil imports, as the U.S. depends heavily on imported Group III base stocks because North American production is not sufficient to cover the growing demand for high performance base oils, particularly for automotive lubricants. South Korean imports were heard to be excluded from tariffs as they fall under the energy commodities category that is exempt. Base oils imported from Canada are currently not subject to tariffs as long as the products are USMCA-compliant, market sources explained.

A busy turnaround schedule in the Americas, Asia and the Middle East has affected Group III availability, with some plants expected to start maintenance and others about to resume production.

In Canada, Petro-Canada has just completed a 35-day maintenance program at its Group III plant in Mississauga, which went according to plan, and the unit was now close to restarting, a company source said. The shutdown had been fully planned for, with contingency inventory built and no impact expected to customers. The Group II unit at the same location continued to operate during the Group III turnaround.

In South Korea, SK Enmove will be completing a partial turnaround at its Group III plant in Ulsan for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

There were also reports that S-Oil has cut back production in Onsan, South Korea, given reduced demand for base oils on a global scale, but this could not be confirmed.

In the Middle East, ADNOC was expected to shut down its Group II/Group III plant in Ruwais, Abu Dhabi, for two to three weeks in late April.

Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, which was originally scheduled to start in late March or early April, but was reportedly postponed.

On the naphthenic base oils front, prices for domestic transactions showed steady levels and were supported by balanced-to-tight supply and demand fundamentals, although there was downward pressure emerging from the crude oil and feedstock side.

The light grades were tighter because of continuous demand from the transformer oil segment, while the heavier grades were expected to see a pickup from the tire and rubber industry ahead of the summer driving season, but this might not materialize given a slowdown in automotive production as automakers scrambled to adapt to the new tariff environment. Spot export prices have inched up from certain suppliers, depending on the grade and the destination, although there continued to be competition with European suppliers.

Downstream, lubricant manufacturers were facing yet another challenge as additive suppliers have announced a tariff-related increase in pricing to go into effect in May. Independent blenders said that margins continued to erode and it was difficult to pass on any raw material increases to finished products because of persistent competition with major manufacturers.

Crude Oil and Diesel

Crude oil futures extended losses on Wednesday and were set for their steepest monthly drop since 2021 as the global trade war threatened to depress global fuel demand, while supply continued to rise.

On April 29, West Texas Intermediate June 2025 futures settled on the Nymex at $60.42 per barrel, compared to $63.67/bbl on April 22. On April 1, futures had settled at $71.20/bbl.

Brent futures for June 2025 delivery were trading on the ICE at $63.66/bbl on April 29, from $67.84/bbl on April 22. They were down from $74.42/bbl on April 1.

Louisiana Light Sweet crude wholesale spot prices were hovering at $65.05/bbl on April 28, compared to $65.68/bbl on April 21 and $74.37/bbl on March 31, according to the U.S. Energy Information Administration.

Low-sulfur diesel wholesale spot prices were at $2.17 per gallon at New York Harbor, $2.14/gal on the Gulf Coast and $2.20/gal in Los Angeles on April 28, compared to $2.12/gal, $2.03/gal and $2.20/gal, respectively, on April 21, according to the EIA.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com

Posted Paraffinic Base Oil Prices: April 30, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).
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