Q1 Challenging for Rerefiners


Q1 Challenging for Rerefiners

The base oil market was a challenging environment for rerefiners during the first three months of 2023, according to recent stock exchange filings by two American companies.

Profits for Safety-Kleen Sustainability Solutions fell 20% from the first quarter of 2022 despite increases in base oil sales volumes and related services – a development that officials blamed on unusually stagnant finished lubricant demand.

The other rerefiner, Heritage-Crystal Clean, reported that operating margin for its oil business shrank by a fifth due to decreased volumes and inflationary pressure.

Meanwhile, Calumet reported higher base oil and process oil sales revenue, HollyFrontier’s lubricants and specialties segment posted a drop in income from operations and Quaker Chemical’s net income jumped nearly 50% for the first quarter.

Clean Harbors

Safety-Kleen parent company Clean Harbors, based in Norwell, Massachusetts, said the business unit’s third-party revenues – which come from sales of base oils and other rerefining products, sales of finished lubricants and fees it charges to collect waste oil – rose 8% during the January-to-March period, from $228.2 million to $246.3 million.

The increase in volumes was due at least in part of the mid-2022 acquisition of Synergy Recycling LLC, including a Kingsland, Georgia, rerefinery that produces vacuum gas oil but not base oil.

“Revenues were up based on the rerefinery acquisition completed in mid-2022, higher base oil volumes and sales of ancillary services,” Clean Harbors Co-CEO Mike Battles said in a news release. “However, our rerefinery spread was compressed in the quarter as the normal seasonal demand pickup has been slow to develop this year. As a result of that environment, base oil pricing has been under pressure compared with a year ago, when we experienced three first-quarter 2022 price increases.”

Battles noted that waste oil collections in the first quarter were strong at 59 million gallons, up 11% from a year ago. “We rapidly lowered our pay-for-oil pricing in the quarter in response to the market and expect that strategy to positively impact us in the coming months,” he added.

Battles said Clean Harbors does expect “the market to stabilize following a difficult start to the year. We are actively managing our waste oil collection to drive our costs down considerably while still gathering the gallons necessary to supply our plants.

“Base oil and blended pricing is more challenging than we anticipated, including an unexpected price decline in April. We are going to continue to drive additional SKSS profitability to offset the spread compression through greater base oil production from a year ago, cost reduction initiatives, accelerating blended sales and cultivating interest in our environmentally friendly solutions.”

Heritage-Crystal Clean

Heritage-Crystal Clean reported that operating margin for its oil business segment was 27% for its first fiscal quarter, which ended March 26, compared to 34% during the same period a year earlier.

“The lower operating margin compared to the first quarter of 2022 was mainly due to a decrease in revenue from lower base oil sales volume, along with increased labor costs and transportation expenses,” the company noted.

Sales revenue – from used oil collection and rerefining activities, as well as sales of recycled fuel oil – decreased 3% to $53 million.

“A decrease in base oil sales volume was the main driver of the decrease in revenue, compared to the prior year quarter, partially offset by an increase in base oil sales price,” the company said.


Calumet reported base oil and process oil sales revenue of $215.2 million for the quarter ended March 31, a 3% increase from $209.5 million, according to its quarterly earnings filing with the Securities and Exchange Commission. Production of those products totaled 10,297 barrels per day in the first quarter, compared to 10,765 b/d during the first quarter of 2022. Wax production slipped 9% to 1,375 b/d.

The company’s performance brands segment, which includes Royal Purple and Bel-Ray finished lubricants along with packaged high-performance fuels, raised sales revenue 8% to $78.8 million. Production volume those products rose 19% to 1,931 b/d in the quarter.

Overall, Calumet rebounded with $18.8 million in net income in the first quarter, compared to a $95.5 million net loss in the same period a year earlier. The net income included $28.7 million attributable to partners and a $9.9 million net loss attributable to noncontrolling interest.

HF Sinclair

HF Sinclair reported $78.7 million in first quarter income from operations for its lubricants and specialty products segment, a drop of 36% from $122.1 million.

The segment’s revenue from external customers decreased 3% to $733.7 million.

The lubricants and specialty products segment includes Petro-Canada Lubricants and its refinery in Mississauga, Ontario, which makes such products as base oils, white oils, specialty products and finished lubricants, along with specialty lubricants from HollyFrontier’s refineries in Tulsa, Oklahoma. Acquired companies Red Giant Oil Co. and Sonneborn are also part of the company’s lubricants and specialty products segment.

Quaker Chemical

Quaker Chemical – also known as Quaker Houghton – reported a 49% jump in net income to $29.5 million, improving from $19.8 million.

Net sales increased 5% to $500.1 million. The company attributed the improvement primarily to an increase in selling price and product mix of about 19%, offset by an 11% decrease in sales volume and a 3% unfavorable impact from foreign currency translation.

“The increase in selling price and product mix was primarily attributable to double-digit increases in selling prices in all segments to offset the significant inflationary pressures on the business,” the company noted in its earnings news release. “The decline in sales volume was primarily attributable to a continuation of software market conditions, especially in Asia-Pacific and [Europe, Middle East and Africa], and the impact of the war in Ukraine.”

The company noted its new structure includes breakouts of net sales and operating earnings for its three reportable segments – Americas, EMEA and Asia-Pacific.

Net sales in the Americas climbed 19% to $241.4 million, and increased by 4% in Europe, the Middle East and Africa. In Asia-Pacific, net sales fell 16% to $96.3 million.

Segment operating earnings in the Americas jumped up 47% to $66.1 million, while operating earnings rose 19% to $27.6 million in Europe, Middle East and Africa, and by 4% to $27.7 million in Asia-Pacific. Total segment operating earnings was up 31% at $121.3 million.

“We are encouraged by our results in the first quarter despite the complexities and uncertainties in the current operating environment, which are likely to persist as we progress through 2023,” CEO and President Andy Tometich said in the release.