While no posted price movements were heard during the week, behind the scenes, competitive pricing activity continued to take place in both the paraffinic and naphthenic segments.
Given that a vast majority of paraffinic and naphthenic values experienced decreases in December, producers have been reluctant to implement further adjustments. With our most recent decrease just a few weeks ago, margins are pretty low, a producer noted.
However, weaker crude oil prices and plentiful availability have led a number of suppliers to offer competitive prices to secure spot deals.
There have also been a few cases where a seller has had to match the lower offer of a competitor in order to retain the business.
This is not a common practice, as most suppliers follow announced price changes, but it appears that the movements have become more widespread in recent weeks, sources commented.
Participants also acknowledged that it has been increasingly difficult to ascertain current spot levels.
Suppliers reported a good uptick in orders as the week progressed, as many consumers had run down inventories before the holidays and were in need of replenishing stocks.
Sellers also said that more volumes than usual were moving by truck and railcar as barges continued to face difficulties due to flooding in the South.
The U.S. Army Corps of Engineers opened the Bonnet Carr Spillway near New Orleans for the first time in nearly five years on Sunday, in an effort to control the flow of the rising Mississippi River and protect the low-lying city.
In production news, further details emerged regarding the upcoming turnaround at Calumet’s Shreveport, La., paraffinic base oil plant in February. The partial turnaround will only affect the heavy grades and will be completed in three weeks, a company source said. The producer expects to build inventories and avoid shipment delays during the turnaround. The Shreveport plant has capacity to produce 4,800 barrels per day of Group I and 7,000 b/d of Group II oils.
Meanwhile, base oil market players continued to watch crude oil price fluctuations very closely, as values have plunged to 12-year lows.
West Texas Intermediate futures fell to levels near $30 per barrel during the week on unmitigated oversupply concerns, and worries about the stock market turmoil in China and future oil demand.
WTI settled on the CME/Nymex at $30.44 per barrel on Jan. 12, down $5.53/bbl from its Jan. 5 settlement of $35.97.
Light Louisiana Sweet wholesale spot prices closed at $33.02 on Jan. 11, compared with $38.39/bbl on Jan. 4, according to data from the Energy Information Administration.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.