Data Belies Sense of Improvement


Contrary to upbeat comments from industry observers, U.S. lubricant demand did not rebound early this year, according to the latest sales data from the National Petrochemical and Refiners Association.

The groups Quarterly Index of Lubricant Sales showed that sales volumes during the first three months of 2004 were 3.4 percent lower than in the same period of 2003. The report said sales of automotive lubricants slid 2.5 percent while demand for industrial lubes dropped 4.8 percent. Grease demand decreased 6.2 percent.

Observers expressed a bit of surprise at the numbers, saying they believe the market has improved this year, after declining in 2002 and 2003.

I would have expected that the QUILS numbers would have gone up, not down, a representative with one lube marketer said. Our sales are definitely up. Of course, the biased message from the sales guys is that were increasing our market share, but the overall message was that the market has improved. So this is a little confusing.

NPRA emphasizes that its quarterly reports are meant to be used as a gauge of market trends, rather than a measurement of total sales, due to the fact that relatively few marketers participate. The association says that volumes covered by the quarterly reports account for more than 72 percent of those covered in its more comprehensive annual report on lubricating oil sales.

Daniel J. Strachan, the associations manager of plant automation and lubricant programs, said there have not been any significant changes in the lineup of participating companies recently that would have affected the accuracy of the reports. In fact, he said, the association had good response to its survey for the first quarter.

As last weeks QUILS report noted, base oil sales rose 4.8 percent during the first quarter. The report included production data published by the U.S. Department of Energy showing that output of paraffinic stocks was 12.9 million barrels, a jump of 8.6 percent from the first quarter of 2003. Production of naphthenic base oils fell 13.5 percent to 2.2 million barrels.

U.S. sales volumes of most types of lubricants have fallen steadily since the nations economy entered recession in 2001. First-quarter sales of automotive lubes were 6 percent lower than the first quarter of 1997, the base year for the survey. The industrial segment has shrunk 26.5 percent, grease demand 44.8 percent over that same period.

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