Motiva, Excel Paralubes, Phillips 66, Calumet, HollyFrontier, Petro-Canada, Paulsboro, SK Americas and Safety-Kleen communicated posted price increases, joining four other producers who implemented markups last week.
Motiva announced a 40 cents per gallon increase on its Prima 100 cut and 45 cents/gal on its Prima 220 and Prima 600 grades. The company also lifted its API Group III Ultra 4 (4 cSt) and Ultra 6 (6 cSt) cuts by 55 cents/gal, all with an effective date of June 17.
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Effective June 18, Excel Paralubes increased its Group II Pure Performance posted prices by 30 cents/gal across the board.
Phillips raised its Group II+ and Group III Ultra-S Base Oil posted prices by 45 cents/gal on June 18.
Calumet informed customers that all of its Group I and II base oils would be raised by 30 cents per gallon, effective June 22.
HollyFrontier will lift the posted price of its Group I SN70, SN100 and SN148 grades by 15 cents/gal, its SN250 by 25 cents/gal, its SN560/600 by 30 cents/gal and its bright stock by 45 cents/gal as of June 23.
Petro-Canada will increase its Group II 70N, 100N, 200N, 350N and 600N by 30 cents/gal. The company’s Group II+ 65N and 100N edged up by 30 cents/gal, and its Group III VHVI 4, 6 and 8 grades moved up by 55 cents/gal, with all the increases going into effect on June 25.
Paulsboro will implement a 15 cents/gal increase on its Group I light-vis grades, 30 cents/gal on its high-viscosity grades and 30 cents/gal on its bright stock on June 23. While Paulsboro communicated the increases last week, they are reflected on the Price Table below this week as it is when they go into effect.
SK will be raising its Group II+ and Group III posted prices by 35 cents/gal, effective July 1. SK’s prices will be adjusted on the Price Table next week due to their effective date.
Safety-Kleen increased its Group II+ posted prices by 30 cents/gallon on the 120 vis grade and 40 cents/gal on the 220/240 vis grade, effective on June 18 in all locations.
Producers and rerefiners who do not post prices were heard to be increasing prices by 30 and 35 cents/gal during this round.
Last week, Chevron increased its Group II posted prices by 30 to 40 cents per gallon, ExxonMobil was reported to have raised its prices by 15, 30 and 35 cents/gal, and Avista Oil lifted its postings by 30 cents/gal.
The increases were driven by the prevailing tight supply conditions, healthy demand, firm feedstock and crude oil prices and other increased production costs.
Market participants reiterated that producer inventories were low and that suppliers were doing their best to meet contractual obligations, but some shipments were still delayed. Spot supply remained almost non-existent, driving spot price indications higher and thwarting the completion of the few export transactions that were discussed as numbers were not workable in most cases.
Supplies of Group III base oils and high viscosity grades were particularly limited over the last couple of weeks, sources said. Recent and ongoing plant turnarounds at Group III facilities in Asia and Europe, together with an increase in demand for these grades as a substitute for Group II cuts were mentioned as factors impacting availability.
The heavy-vis cuts have also been in high demand and producers have been unable to catch up with all orders, particularly in the case of Group I base oils. Following extended turnarounds at a couple of Group I facilities in the first quarter, domestic supply levels have not recovered yet, and have therefore left many buyers scrambling to find heavy grades and bright stock, which were also tight in other regions and limited import opportunities. Some suppliers have already notified customers that they would be unable to offer spot supplies until the end of the year. A key Group II/II+ supplier has placed customers back on allocation, according to sources.
Both paraffinic and naphthenic participants had hoped to build inventories ahead of the hurricane season on the U.S. Gulf, which started on June 1 and was predicted to be a fairly active season. However, a majority of players have been unable to build stocks due to the current supply and demand conditions. Buyer efforts to pad inventories supported the strong requirement levels and offset the typical demand slowdown seen during the summer months.
The first significant tropical weather system pummeled communities along the U.S. Gulf Coast and inland over the weekend and first part of the week. The storm, known as Tropical Storm Claudette, forced Chevron Corp. to evacuate personnel from its oil platforms ahead of the severe weather, but the company said in a June 21 statement that offshore workers had returned to facilities and production was ramping up. There were no reports of base oil production having been affected by the storm at the time of writing.
In Mexico, demand for light base oil grades was said to be steady, and a handful of cargoes were shipped from the United States over the last two months to meet fuel blending demand there. Light grades were said to be more plentiful than their high-vis counterparts. There were also a couple of light grade shipments lined up from South Korea to Brownsville, Texas, likely intended to be then shipped on to Mexico.
A base oil cargo was also heard to have been concluded from the U.S. Gulf to Argentina in mid-May. Another base oils parcel was heard to have been discussed from South Korea to Colombia. Interestingly, there was also talk of a possible cargo moving from Yangpu, China, to Houston in July. China has so far been mostly a net importer of base oils, but domestic production has increased in recent years as new facilities have come on stream. However, logistical issues due to a lack of suitable vessel space may be a deterrent to some of these transactions.
On the naphthenic base oils side, supply has also been very tight, and this situation was exacerbated by an unplanned outage at the Valero refinery in Three Rivers, Texas, following a fire on June 6. The refinery houses a 2,400 barrels per day naphthenic base oils unit, according to the Lubes’n’Greases Guide to Global Base Oil Refining.
The damage to the fuels unit forced the refinery complex to shut down and a restart was not expected until mid-July. The producer also declared force majeure on naphthenic base oil output, which had already been previously affected by lingering production issues stemming from damages incurred during a freezing winter storm in February.
The six rounds of base oil price increases since the beginning of the year (seven since December 2020) placed pressure on downstream manufacturers’ margins, prompting several to seek price hikes on lubricants, greases and additives of between 5% and 17% for implementation in July and August. These follow several rounds of price increases during the previous months.
Additionally, a lack of base oils and additives have resulted in reduced manufacturing rates and temporary shutdowns at some lubricant blending facilities, sources said.
In production news, there were reports of a fire that broke out at Petro-Canada’s refinery in Mississauga, Canada, on June 15. The fire, which was isolated to a single pumping system, was put out promptly, and there were no injuries, local media reports said. No further information on whether the incident had any impact on base oil production was available at press time.
Upstream, crude oil futures settled slightly lower on Tuesday after Brent jumped above the $75 per barrel mark for the first time in over two years on reports of a larger-than-expected draw in crude inventories. However, discussions by the OPEC+ of increasing production and rising U.S. output placed a damper on values.
July West Texas Intermediate (WTI) settled at $73.06/barrel on June 22, from $72.12/bbl on June 15.
Brent futures for August delivery settled at $74.81/bbl on the CME on June 22, from $73.99/bbl on June 15.
Light Louisiana Sweet crude wholesale spot prices were hovering at $74.94/bbl on June 21 and had closed at $72.84/bbl on June 14, according to the Energy Information Administration.
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.
Historic and current base oil pricing data are available for purchase in Excel format.