Most major oil companies have informed U.S. customers of finished lubricant price hikes in recent weeks that will take effect from mid-June to early July, most citing increases in base oil and additives costs.
- Chevron will raise prices 6 to 10 percent on lubricating oils, gear lubes and greases effective June 13.
- ConocoPhillips will hike prices 7 to 8 percent on finished lubricant products, depending on product-specific factors, effective June 13.
- ExxonMobil will increase prices up to 7 percent on ExxonMobil branded and unbranded lubricants and greases effective June 16.
- Citgo will raise prices 8 to 10 percent on list and customer specific prices effective with shipments on and after June 17. The change is applicable to Citgo, Mystik and Clarion branded bulk and packaged finished lubricants, white oils and greases.
- Shell will bump up prices for selected lubricants up to 7 percent effective June 27.
- Valvoline will increase prices up to 9 percent on lubricant products effective June 27.
- BP Castrol will hike prices up to 9 percent on all passenger car, motorcycle, commercial and ancillary products, including synthetics in all package types, effective July 5.
Most of the notification letters included a variation on Chevrons explanation to its customers: This increase is being driven by the continuing rise in base oil and additive costs which impact the manufacturing of our lubricants and greases. Citgos letter to customers also cited an escalation in packaging material costs.
Most notifications also said some prices will increase more or less than the general increase.
I think the news media in general has done the public a disservice by whipping up the recent $110 to $115 NYMEX crude barrel price drop to $95 to $100. They talk of 50 cents per gallon gasoline price drops, and so the common man therefore believes they will see lubricant price drops, not increases, one industry source told Lube Report. This PR will be the biggest obstacle to overcome, putting across these June increases.
Another distributor echoed the sentiment, noting that on the street level, customers dont always understand the differences between fuel and lubricant pricing.
We as distributors are walking in on behalf of corporate people, and were the ones that have to be the bearer of bad news to the end users, this source said. Theyre looking at us, going Wait a minute, the price of crudes is coming down, and gas is coming down, and youre coming in here and telling me the price is going up. It makes it a little bit more difficult on our end, and basically a lot of times its just a constant re-education. It seems again the main culprit is the tightening of the base oil supply.
The source suggested weakening of the U.S. dollar could also be a factor impacting the base oil markets, although it had strengthened in relation to foreign currencies in recent weeks. I dont think its enough – I still think theres a lag, or gap, before it finally hits the base oil market.