The U.S. base oils market was gearing up for increased activity as consumers have started to pad inventories for the spring lubricant production season and suppliers appeared prepared for heightened demand, although business has been less robust than at the same time in pre-pandemic years. A flurry of orders was brought about by posted price decreases in January, but the pace has cooled slightly since then.
Suppliers did not expect orders to improve substantially until the end of February or early March because buyers seemed concerned about downstream conditions and preferred to delay orders as long as possible, hoping for increased lubricant demand and further price decreases to emerge. These factors, together with firm diesel, vacuum gasoil and asphalt prices, has led to reduced run rates at a number of base oil plants and an increase in distillates and alternate refined products production. On the bright side, participants also expected a more intense driving season as pandemic-related conditions that had limited travel have waned, also leading to increased air travel and jet kerosene demand.