U.S. Base Oil Price Report


(Editor’s note: Updated at 11:30 a.m. EST Nov. 30 to include price changes announced by SK Enmove and Excel Paralubes.) A number of paraffinic base oil producers joined the ranks of Chevron and Motiva, who had announced posted price decreases last week prompted by subsiding crude oil and feedstock values and slowing base oil demand. Reports circulated that Excel Paralubes, ExxonMobil, Calumet and SK Enmove would also be lowering their postings in the next few days. On the naphthenic base oils front, the light grades were described as tight, but availability may improve once a plant turnaround is completed on Dec. 8.

Aside from the posted price adjustments, market activity was somewhat subdued this week, following the Thanksgiving holiday in the United States and ahead of the ICIS Pan American Base Oils and Lubricants conference being held in New Jersey Nov. 30-Dec. 1.

According to reports, Excel Paralubes communicated a 30-cents per gallon posted price decrease on its API Group II 70N and 110N grades, and a 50-cents/gal decrease on its 220N and 600N grades, effective Dec. 1.

SK Enmove informed customers that the company would be decreasing its Group II+ 70N grade by 10 cents/gal and all of its Group III grades by 15 cents/gal, with an effective date of Dec. 1.

Calumet informed its customers that due to market conditions, the company would be decreasing its paraffinic base oil prices, effective Dec. 6. The producer’s Group I SN600 and bright stock grades will be lowered by 20 cents/gal; its Group II 60N, 75/80N, 100N, 150N cuts will decrease by 30 cents/gal, and its Group II 325N cut will be adjusted down by 50 cents/gal. These decreases will be reflected in the Price Table below when they go into effect next week.

ExxonMobil will also be lowering its Group I, Group II and Group II+ posted prices, sources reported. The producer’s Group I grades will be adjusted down by 20 cents/gal, and its Group II EHC65 and Group II+ EHC45 grades will be decreased by 15 cents/gal. The company’s Group II EHC 120 grade will be reduced by 20 cents/gal, but this posting is not listed on the Price Table below.  All of the decreases will go into effect on Dec. 8, and the Price Table will be revised to reflect these changes next week.

Last week, Motiva had communicated a 30 cents per gallon decrease on its Group II 100N grade and 50 cents/gal on its 220N and 600N grades, effective Dec. 1. Postings for the company’s Group II+ and Group III grades will remain unchanged. The price adjustments are reflected in the Price Table below as they go into effect this week.

On Nov. 21, Chevron lowered its Group II 100R grade by 30 cents per gallon, and its 220R and 600R base oils by 35 cents/gal, reflecting market conditions.

The decreases did not come as a complete surprise as suppliers sometimes adjust prices down in the last few weeks of the year to stimulate orders and reduce inventory levels. This year, in particular, this trend was accompanied by falling crude oil and feedstock values, along with sluggish fundamentals throughout the year.

Oil futures have receded from the steep levels seen in September, when West Texas Intermediate crude oil prices were near $90 per barrel and this had driven a majority of base oil suppliers to announce price increases. No other base oil price adjustments had taken place until SK Enmove lowered its Group II+ and Group III posted prices by 10 cents/gal on November 1, and later in the month, Chevron stepped out with the decrease mentioned above.

Crude oil prices were volatile during the week and jumped by 2% on Tuesday on weather-related oil production and export disruptions in Russia and concerns that OPEC+ would extend or amplify production cuts. OPEC+ was scheduled to hold an online ministerial meeting on Thursday to discuss 2024 production goals.

On Nov. 28, WTI January futures settled on the CME at $76.41/barrel, compared to $77.77/bbl on Nov. 21.

Brent futures for January delivery settled on the CME at $81.68/barrel on Nov. 28, from $82.45/bbl on Nov. 21.

Louisiana Light Sweet crude wholesale spot prices were hovering at $77.96 barrel on Nov. 27, from $81.30/bbl on Nov. 20, according to the Energy Information Administration.

With the recent drop in crude oil and feedstock values, refiners have kept high base oil output rates as margins were still considered advantageous compared to distillates, particularly for Group II base oils. Demand has slowed down, however, fanning concerns that supplies would start to mount and result in oversupplied conditions in some segments of the market.

Ample imports of Group III grades from Asia and the Middle East as U.S. prices have been more attractive than those in other regions, together with growing domestic production, were also likely to lead to a product overhang.

Both domestic and export demand has weakened due to the approach of the end of the year, when buyers prefer to keep lean inventories, but buying interest from a number of countries, including Brazil and Mexico, remained fairly vibrant, although price expectations have been adjusted down on ample supply levels.

Additionally, there have been discussions to move product to other regions such as Asia and Africa, with a 6,000-metric ton cargo mentioned for shipment from the U.S. Gulf to El Dekheila, Egypt, in December. Some suppliers have also actively pursued opportunities into India, as U.S. exports to Mexico had slowed down on account of the neighboring country’s new import regulations. This had caused prices in India to drop, sources said. Details emerged of a 9,000-ton parcel having been shipped from Pascagoula, Mississippi, to Mumbai, India, on Oct. 14, and additional U.S. cargoes were also heard to be on their way to India.

On the naphthenic base oils side of the market, conditions were similar to those observed in the paraffinic segment, with demand softening on account of seasonal patterns and expected to slip “more dramatically” next month as downstream plants shut down for maintenance and holidays, sources noted.

Consumption for the lighter pale oils was still described as strong. A majority of suppliers had little additional light cuts to offer, aside from those sold under contract. Demand for the mid- and heavy grades has declined as expected for this time of the year, with supplies of the heavy-vis cuts heard to be lengthening.

Naphthenic base oils export business to Europe, Asia and Latin America remained steady, although there has been a slowdown in some countries as the year-end approaches. Shipments into Mexico that had been disrupted due to new import regulations were gradually moving to their destinations as new import permits were being processed.

Supply and demand of naphthenic base oils have been partly affected by a brief unexpected production outage at one plant in late October and an ongoing turnaround at another unit.

San Joaquin Refining started a three-week turnaround at its naphthenic base oils plant in Bakersfield, California, on Nov. 13, and was expected to restart the unit on Dec. 8. The producer was anticipated to meet contract obligations but was unlikely to have extra availability of its light grades after the maintenance program. The turnaround was also expected to help the producer manage inventory levels of the heavy grades. San Joaquin has not scheduled any turnarounds in 2024.

Calumet plans to have a turnaround at its naphthenic base oil unit in Princeton, Louisiana, in the first quarter of next year. The producer was expected to meet contractual requirements during the outage and was likely to build inventories ahead of the shutdown.

Lower crude oil and feedstock prices continued to place downward pressure on naphthenic base oil values, with formula-based contracts tied to a diesel index seeing decreases over the last few weeks, but no other official adjustments reported. Some large account may have received special discounts, but this did not seem to be a widespread situation.

Downstream, some lubricant and finished products manufacturers raised their prices in the second half of October or first half of November to offset August and September base oil posted price increases, together with higher packaging and transportation costs. Other suppliers were still negotiating price adjustments with their customers. The increase implementation has been uneven, with buyers resisting the increases, particularly as some base oil producers have announced posted price decreases this month. Some manufacturers have lost market share because they had no other choice than to implement the hikes.

Independent manufacturers had announced increases of up to 10%-18% on lubricants and greases, and up to 9% for brake fluids, with effective dates set between Oct. 16 and Oct. 30. Major suppliers had communicated increases on lubricants of up to 10%-15% for early to mid-Nov. implementation, but it was heard that some of them had agreed to lower hikes.

Additive suppliers were hoping to implement price increases of up to 6%-12%, depending on the manufacturer, due to inflation and higher base oil and transportation costs. A lubricant additive producer communicated markups of up to 8%, effective Nov. 15, and a second additive manufacturer expected to increase prices by up to 10-12% in mid-November too. A third additive manufacturer communicated an increase of up to 6%, effective Dec. 1. Buyers were heard to be resisting the price hikes due to plentiful availability and some of the base oil posted price decreases that emerged this month.

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

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.

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