Chevron, Excel Paralubes, HollyFrontier, Petro-Canada, ExxonMobil, Calumet and Safety-Kleen informed their customers that the producers would be decreasing posted prices. Motiva was first out the gate with decreases last week, communicating reductions that became effective on September 1, marking the first paraffinic price adjustment in more than two months. In other news, Hurricane Fiona brought heavy rain and flooding to Puerto Rico, the Dominican Republic and several other Caribbean islands, but was expected to bypass the United States mainland. Hurricanes always raise concerns about potential supply disruptions at base oil plants along the U.S. Gulf Coast.
Chevron announced that the company would be decreasing the posted price of its API Group II base oils, effective Sept. 20. The posted price of Chevron’s Group II 100N will be reduced by 45 cents per gallon, its 220N by 50 cents/gal, and its 600N by 30 cents/gal, to “reflect market conditions,” the company explained.
Excel Paralubes will be lowering the posted price of its Group II 70N, 110N and 225N by 50 cents/gal, and its 600N by 20 cents/gal, effective Sep. 20.
According to reports, ExxonMobil notified customers that the company would be adjusting down posted prices of its Group I SN 115, SN150, SN400, SN800 and bright stock by 35 cents/gal. The company’s Group II EHC 65 and Group II+ EHC 45 will also be reduced by 35 cents/gal, while its EHC 120 (not included in the table below) will be lowered by 20 cents/gal, all effective Sep. 22.
HollyFrontier communicated posted price decreases of 45 cents/gal on its Group I SN70, SN100, SN150 and SN250 cuts. The company’s Group I SN500 and SN600 cuts will be marked down 35 cents, and its bright stock will go down 40 cents/gal, with all adjustments going into effect on Sep. 23.
Petro-Canada intends to decrease posted prices for its Group II 70N, 100N, 200N and 350N base oils by 50 cents/gal. The posted price of the Group II 600N grade will be trimmed by 25 cents/gal, effective Sep. 21.
Petro-Canada’s Group II+ grades will also be adjusted down by 20 cents/gal, but with an effective date of Sep. 23.
Calumet will lower posted prices on its Group I SN600 and bright stock by 35 cents/gal. The company will also reduce its Group II 75/80N, 100N, 145N and 325N cuts by 50 cents/gal, with all changes becoming effective Sept. 26.
Paulsboro was expected to mark down its Group I postings next week as well, but the amount and effective date had not been determined yet, according to a company source.
Safety-Kleen will be reducing the posted price on its Group II+ 120 and 240 cuts by 50 cents/gal, effective October 1. The price table below will be adjusted to reflect Safety-Kleen’s price changes the first week of October, which is when the decreases take effect.
Last week, Motiva had informed its customers that the company would lower the price of its Group II 100N cut and 220N cut by 50 cents per gallon, and its 600N grade by 20 cents/gal. Within the Group II+/III segment, Motiva reduced the price of its 2 cSt and 3 cSt grades by 50 cents per gallon, while prices for its 4cst, 6 cst and 8cst grades remained unchanged. The price changes went into effect retroactively on Sep. 1.
The producer was also preparing for a turnaround at its base oils plant, starting in October. There will be turnarounds at a number of other base oil plants in the first quarter of 2023 as well, which may lead to a tightening of supplies in the last quarter as producers build inventories ahead of the outages.
An extended turnaround at a major U.S. Gulf producer’s Group I and Group II facility since June had resulted in increased buying interest for Group I and Group II base oils from other suppliers in recent weeks. The producer was heard to have restarted its plant, allowing for more of these grades to enter the supply system.
Sources commented that the posted price decreases for the Group II 600N grade were generally smaller than for the other grades because that cut was tighter than most of the other base oils.
However, a seasonal slowdown in demand, together with the gradual release of some of the extra stocks kept during hurricane season has led to a lengthening of the lighter Group I and Group II grades, exerting downward pressure on posted and spot prices. Lower crude oil and feedstock values also contributed to the downward adjustments. Spot numbers have slid anywhere from a couple of pennies to 15 cents, depending on the product, in the last two weeks.
Activity in the Group III segment was described as fairly robust, particularly as demand for the 4cSt grade remained healthy, leading to a tightening of supplies, not only in the United States, but on a global scale.
While there continued to be buying appetite for U.S. base oils from Mexico, Brazil and other South American countries including Peru, Chile and Ecuador, buyers appeared timid at accepting current U.S. offers as they were concerned that prices might fall further in coming weeks. There were overtures towards concluding deals involving Northeast Asian product. While freight rates still represented a roadblock to the conclusion of many transactions, flexibag business for Asian base oils has become a reasonable alternative in terms of pricing.
On the naphthenic base oils front, prices were described as steady, supported by a balanced-to-tight supply and demand scenario. This was partly the result of an unexpected production outage at a naphthenic base oils plant which lasted three weeks. The producer has restarted operations but is reported to have little extra availability.
Another naphthenic base oils producer was preparing for an upcoming turnaround in October and was also limiting the amount of product that it was making available beyond those volumes sold under contract. There was little product available for export, and prices in other regions were not considered attractive enough at the moment.
In downstream markets, sources reported that on Sep. 8, Afton Chemical had lifted the force majeure it had declared on additive production back on July 26, when its plant in Sauget, Illinois had been flooded, following torrential rainfall in St. Louis, Missouri. (For more information, please see the Afton story in this issue of Lube Report).
Afton customers had been placed on 50% allocation, particularly those who purchase engine oil additive packages and some off-road products from the company. Despite the lifting of the force majeure, sources said that some of the sales controls were expected to remain in place through the end of the month. Afton also assured customers that it would support reliable supply through its global supply network.
The lifting of Afton’s force majeure was welcome news to lubricant manufacturers given that this segment has been plagued by global additive shortages for more than two years – ever since the fire at Lubrizol’s Rouen, France, additives plant in 2019 took more than 5,200 metric tons of chemicals out of the market in one go. Lubrizol’s global supplies have been tight since then.
Some of the supply chain issues that were brought on by the coronavirus pandemic still lingered, and other problems like raw material shortages, transportation issues and steep base oil prices also continued to affect operations.
Strained supplies and climbing costs prompted additive suppliers to lift prices in August and September. An additive supplier implemented a price increase of up to 15 percent in August, while a second additive supplier increased prices on Sept. 1. A third additive manufacturer has communicated price markups of up to 10%, effective Sep. 23.
Lubricant and finished products manufacturers have been trying to offset some of the mounting costs by implementing increases of their own. While the freshly announced base oil price decreases were expected to bring some relief, they also make it more difficult for lubricant manufacturers to push through their own increases because customers will resist hikes in view of the downward base oil adjustments. However, blenders have been carrying higher production costs since the beginning of the year, when base oil prices saw almost monthly markups and they were still trying to catch up. The last round of posted base oil price increases went into effect in June.
Lubricant manufacturers had therefore called for price increases in June, July and early August, and a number of suppliers intended to adjust values in September and/or October as well. One supplier was expected to raise prices by up to 15% on Sept. 1 and a second manufacturer planned to increase prices on Sept. 19, while a third supplier has slated an increase with an effective date of Oct. 1. Several independent blenders were still evaluating the market situation and considering increases since they had received several price hikes for additives and other raw materials.
A number of lubricant manufacturers have not been able to implement increases as intended as they had concerns of hurting demand. They have therefore not been able to recoup a large portion of the base oil price hikes, sources said.
This week, base oil and lubricant market participants were relieved to find out that the general rail strike that threatened to bring the U.S. freight system to a halt last week was averted as freight rail companies and unions representing tens of thousands of workers reached a tentative agreement on Sept. 15.
Upstream, crude oil futures edged higher on Monday on concerns about a tightening of oil supplies but fell on Tuesday on expectations that the U.S. Federal Reserve would increase interest rates to curb inflation on Wednesday, and that this would dampen crude and fuel demand.
Meanwhile, several media outlets reported that China’s imports of Russian crude oil soared by nearly 28 percent in August compared to the same month last year, marking the fifth consecutive month that import quantities have increased.
On Sept. 20, West Texas Intermediate October futures fell by almost $3 per barrel from a week ago and settled at $84.45/barrel, compared to $87.31/bbl on Sept. 13.
Brent futures for November delivery settled on the CME at $90.62/barrel on Sept. 20, from $93.17/bbl on Sept. 13.
Louisiana Light Sweet crude wholesale spot prices were hovering at $88.15/barrel on Sept. 19, compared to $90.48/barrel on Sept. 12, according to the Energy Information Administration.
Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.
Posted Paraffinic Base Oil Prices
September 21, 2022
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).
Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.
Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/
Historic and current base oil pricing data are available for purchase in Excel format.
*ExxonMobil prices obtained indirectly.