Base oil buying activity has started to improve as blenders begin to build inventories for the spring production cycle ahead of the summer driving season, when motor oil consumption increases. “Business has picked up a bit. It is still not as great as usual at this time of the year, but it is better,” a market source noted. Other participants agreed and mentioned an uptick in demand from the industrial and agricultural segments as well.

As has been the case over the last several weeks, base oils in the API Group I category were described as balanced-to-tight, with bright stock spot prices edging up by a few pennies per gallon on limited availability. With some of the industrial and agricultural activities starting to pick up the pace, consumption of this grade was expected to stay robust and prices were likely to be exposed to upward pressure.

The Group II segment has seen a tightening of supplies because of plant turnarounds and improving demand as the spring production season gets underway. There were reports of increased spot prices in this segment as well, with the light-viscosity cuts seeing small increases of one or two cents per gallon as they were the tightest.

A number of plants were expected to start turnarounds this month and in April, which was anticipated to limit spot supplies as producers were likely to prioritize contract commitments.

A couple of rerefineries will also be completing maintenance programs this month, further limiting supply options.

Calumet was expected to start a planned shutdown at its Group I and Group II units in Shreveport, Louisiana, this week. The turnaround will last two weeks and had originally been scheduled for the second half of February, but was later postponed. The producer has assured customers that it will have built ample inventory to cover contract demand during the maintenance.

Chevron was expected to commence a three-to-four-week turnaround at its Pascagoula, Mississippi, Group II plant in April, but was anticipated to have started building 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 announced that its paraffinic refinery in Newell, West Virginia, which houses a Group I and Group II base oils unit, has a scheduled a maintenance event beginning March 31. Various operating units of the refinery will be down for approximately seven weeks as the producer implements several reliability improvements. The company also said that no supply interruptions were expected for Ergon’s current ratable customers.

Further down the road, Excel Paralubes was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, in the second half of this year, according to sources. The producer was also expected to build inventories ahead of the shutdown.

In the Group II+ segment, Safety-Kleen will be starting a turnaround at its rerefining plant in Breslau, Canada, this week. The shutdowns typically last a week or less, and are planned well in advance, so the producer has sufficient inventory in place to cover contract commitments.

Avista Oil’s rerefining Group II+/Group III plant in Peachtree City, Georgia, completed a four-day planned shutdown last week that was not expected to have any impact on customers’ orders as the producer also prepares inventories ahead of time.

Spot prices for Group III cuts have also inched up because of tightening supplies. Not only have domestic producers reduced Group III output in favor of increased Group II production, but import volumes have also fallen in recent weeks, and there are several plant turnarounds on the horizon, both in the Americas, as well as in Asia and the Middle East. In Asia, Group III spot prices have also moved up because of limited spot availability, and this was also expected to have an impact on other regions that consume Asian material.

In Canada, Petro-Canada plans to embark on a 35-day turnaround at its Group III plant in Mississauga in April, while the Group II plant at the same location will continue to operate.

The turnaround was fully planned for, with contingency inventory built and no impact expected to customers, a company source explained.

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.

In the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in late March or early April.

In terms of paraffinic base oil exports, suppliers felt less pressure than at the end of last year and earlier this year to find outlets for their surplus material in other regions because the domestic market has tightened and demand was expected to improve ahead of the summer driving season.

Nevertheless, there were brisk discussions involving Group I and Group II grades moving to Brownsville, Texas, and onto Mexico, where buyers appeared eager to build stocks ahead of potential tariffs on U.S. imports. While Trump threatened to impose tariffs on all imports from Mexico and Canada in March, the levies have been postponed until April 2, following discussions with Mexican president Claudia Sheinbaum and Canadian prime minister Justin Trudeau.

There has also been revived buying interest from Brazil, although lower prices by a domestic producer and growing inventories were keeping buyers at bay. The higher availability was said to be partly the result of reduced demand from lubricant producer Moove – the second largest lubricant supplier in Brazil – following a fire that shut down the plant in February.

Consumers seemed to be more interested in Group II light cuts than Group I grades, as domestic Group I supplies were plentiful and the price gap with the higher performance base oils has narrowed. As seems to be the case in most regions, bright stock availability was snug and prices were maintained or increased slightly.

In the naphthenic base oils camp, prices were stable, supported by a tight supply and demand scenario, following a turnaround at San Joaquin Refining’s plant in February and an uptick in consumption levels at the start of the spring production cycle.

The light grades were the tightest, with the pale oil 60 showing strained conditions given strong demand from the transformer oil sector, followed by the pale oil 100 cut. The heavier grades were also anticipated to see increased consumption in the coming months as demand from the rubber and tire segment ramps up ahead of the summer driving season.

Naphthenic producers have largely abstained from adjusting prices as they monitored supply and demand fundamentals, and developments on the crude oil front. While lower crude oil prices had applied downward pressure on values in February and most of March, crude futures have somewhat moved up this week. Suppliers also explained that crude oil values would have to be sustained at a certain level for an extended period before any price revisions would be considered.

In industry related news, the imposition of tariffs by U.S. President Donald Trump is already having an impact on global supply chains. On March 4, the U.S. imposed an additional 10% tariff on all imports from China, on top of a 10% tariff that started on Feb. 4. Trump was also expected to increase tariffs on auto imports from Japan to 25% from the current 2.5%.

Japanese car manufacturer Honda plans to start procuring batteries for its hybrid vehicles from a Toyota plant in the U.S. to avoid the higher tariff risk, Nikkei Asia reported. Honda had been purchasing batteries from Japanese and Chinese producers and shipping them to the U.S. “The company’s shift is part of a wider effort by Japanese automakers to join forces in establishing new supply chains,” the article noted, adding that Toyota – another Japanese auto maker – has invested $14 billion to build its first overseas battery plant in North Carolina. This plan was in place long before the tariffs became an issue. The plant will start supplying hybrid vehicle batteries in April.

Crude and Diesel

Crude oil futures traded up early in the week, but slipped on Wednesday morning as Russian President Vladimir Putin agreed to a 30-day halt on energy infrastructure attacks in Ukraine in exchange for an identical halt of attacks on Russian infrastructure from the Ukrainian side. Higher than expected crude stocks in the U.S. also weighed on prices.

On March 18, West Texas Intermediate April 2025 futures settled on the Nymex at $66.90 per barrel, compared to $66.25/bbl on March 11.

Brent futures for May 2025 delivery were trading on the ICE at $70.53/bbl on March 18, from $70/bbl on March 11.

Louisiana Light Sweet crude wholesale spot prices were hovering at $70.34/bbl on March 18, from $70.16/bbl on March 10, according to the U.S. Energy Information Administration.

Low sulfur diesel wholesale spot prices were at $2.20 per gallon at New York Harbor, $2.13/gal on the Gulf Coast and $2.21/gal in Los Angeles on March 18, compared to $2.19/gal, $2.12/gal and $2.08/gal, respectively, on March 10, according to the EIA.

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

*ExxonMobil prices obtained indirectly.
**Rerefiner

Posted Paraffinic Base Oil Prices: March 19, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).
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