Several major and independent lubricant marketers have reduced prices on finished products in the United States in recent weeks. Industry insiders said the move was predictable given recent reduction in base stock prices and complicated in some cases by measures taken to combat the Covid-19 pandemic.
Sources also said the actions offered scant hopes of boosting sales volumes given the extent to which lubricant demand has fallen in the face of government lock-down orders.
Citgo, Amalie Oil Co., Cam2 International, Sinclair Lubricants and Smitty’s Supply Inc. all reduced prices since the end of March according to industry sources, Jobbers World newsletter and notices obtained by Lube Report. In addition, ExxonMobil and Warren Oil implemented temporary volume allowance discounts.
The markdowns ranged up to around 40 cents per gallon depending on product or 5 cents per pound for greases. Suppliers attributed the actions to reduced expenses, including raw materials costs. Base oil posted prices in the United States underwent two rounds of cuts in March and April.
Officials with lubricant marketers said there was little reason to hope that price cuts will spur sales.
“Prices are falling for the same reason they usually do – reduced costs, primarily for base oils,” said an official with one independent lube company, who asked not to be identified. “The thing that Covid has added to the equation is there’s no demand, so you can do things to try to stimulate sales, but that’s unlikely to happen.”
Sources said the situation was exacerbated by the fact that finished lubricant prices rose earlier this year and that many users stocked up before those hikes took effect. Many still have not worked through those inventories and therefore have even less need for additional purchases.
Officials said the recent lubricant price cuts took longer than normal to implement because of workplace disruptions caused by Covid-19. ExxonMobil reportedly told customers that it opted for TVAs instead of reducing prices because it was a more practical way of passing along cost savings.