During the past week SK issued a fresh price announcement, adding 15 cents per gallon to its API Group III and III+ grades. Whether other producers follow suit remains to be seen, but some players anticipate a full round of posting increases, given the current extreme market conditions.
SK said it raised Yubase 4, 6 and 8 by 15 cents per gallon while also upping its Yubase 4 plus (Group III+) by the same increment, effective Tuesday, June 1. The company did not alter its posting for its Group II+ Yubase 3, which remains at $3.79/gal.
Meanwhile, the supply/demand picture continues to be desperate, and it does not appear that market conditions can be rectified any time soon, frustrated sources lamented.
In the midst of the current supply crunch, buyers anxiously seek base oil volumes, but with no luck. Motivas supply restrictions remain in place, and Nynas has added sales controls (see separate story), while many other producers are in sold-out positions.
In fact, suppliers say that the wide-spread depleted inventory situation will likely remain dire through June. Nevertheless, sellers say that they will strive to fulfill their contract customers requirements, but noted that it will take weeks even to catch up on backup orders. They reiterated that there is no surplus oil available and that pure spot transactions are not being entertained.
On a more positive note, the Motiva Port Arthur, Texas, facility is up and running at top rates, but the company is dealing with rock bottom stocks. Also, Calumets Shreveport, La., and Ergons Newell, W. Va., plants, which both experienced operating issues in the recent past, are currently running to scheme.
In addition to these publicized operating issues, several other plant glitches contributed to a number of producers running low on base oils.
There are conflicting reports regarding whether imports are being delayed due to the devastating oil spill in the Gulf of Mexico. Some sources say that it is not impacting shipments into Houston, while a few others believe it has caused a backup of about a week. It was also pointed out that some smaller cargo carriers are likely dealing with delayed arrivals when coming into the Mississippi for discharge.
The critical supply deficit in the United States is prompting a number of buyers to seek products from European, Asian and South American suppliers. This has resulted in limited satisfaction, as base oil supply in these regions is also running tight.
At the close of the Tuesday, June 1, NYMEX session, light sweet crude futures ended at $72.58 per barrel, a gain of $3.83 compared to the week-earlier settlement at $68.75/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.