Arduous negotiations are ongoing between buyers and sellers regarding May shipments of base oils. While most producers were heard to be seeking price increases, buyers are presenting strong resistance because of difficulties passing along cost increases.
Base oil sellers are hoping to achieve increases of U.S. $20 to $30 per metric ton to offset firm production costs and to rebuild eroded margins. Although crude oil and feedstock prices have fluctuated during the last few weeks, producers have seen their margins steadily deteriorate since the last quarter of 2013. Given that the spring season is traditionally the strongest time of the year for base oil demand, producers feel that a tighter demand-supply balance would support higher prices.