U.S. Finished Lube Prices Rise

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ExxonMobil, Shell, Chevronand Phillips 66 notified U.S. customers of upcoming finished lubricant price increases that take effect in early May. Some companies cited recent increased in costs of raw materials and delivery as the reason for the increases.

Announcements of increases by major oil companies – each up to 6 percent and taking effect on May 6:

  • ExxonMobil, on passenger vehicle, commercial vehicle, industrial, marine and aviation lubricants;
  • Shell, on all its finished lubricants;
  • Chevron, on all lubricating oils and greases;
  • Phillips 66, on all its finished lubricants.

Shell said its adjustments were due in part to increasing costs of raw materials used in the production and delivery of our products. Chevron and Phillips 66 each noted that the rising costs of raw materials impacted the manufacturing of its products.

Industry sources also reported that several smaller blenders – including Chemlube, Warren Distribution, CAM2, Smittys Supply and Reliance – also announced price increases to their customers, mostly in the range of around 5 to 8 percent.

Industry consultant Geeta S. Agashe, president of Geeta Agashe & Associates LLC, said increases in raw material costs, increases in freight costs and supply-demand dynamics all impact pricing for finished lubricants.

Demand for lubes always picks up in spring as the driving season peaks with holidays and weather improvement, Agashe told Lube Report. She noted that base oil price increases also impact costs for lubricant additives because base oil is used as a diluent oil by additive companies.

Ned Zimmerman, chemicals group leader for Cleveland-based market research firm Freedonia Group, said the main factor in the finished lubricant price increases was likely the run-up in base oil prices in the past several weeks. There appear to be two main factors there, Zimmerman told Lube Report. The corresponding jump in crude oil prices from the low values of last fall as the market has become more convinced that major producers will work to reign in supply and balance the market. And the flooding in the Midwest that has challenged base oil distribution.

The same flood-related distribution issues may also be impacting finished lubricant producers to some degree, he suggested, though I dont believe they are as sensitive to this as the base oil suppliers.

Recent jumps in crude oil values have encroached on base oil margins, pressuring producers to seek price increases between mid-March and early April.

Crude values hovered near five-month highs, boosted by OPEC production cuts, output disruptions in Venezuela, sanctions on oil exports from Iran, and a drop in United States shale oil production. West Texas Intermediate futures closed above $62 per barrel on April 2, compared with around $49 per barrel on Jan. 9.

Driven by steeper feedstock and production costs, paraffinic base oil producers decided to lift base oil postings between 5 and 25 cents per gallon, while naphthenic suppliers raised prices by 10 to 15 cents per gallon. The series of increases was kicked off by Motiva on March 14.

Gabriela Wheeler contributed to this report.

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Finished Lubricants    North America    Region    U.S.A.