Paraffinic and naphthenic base oil suppliers continued the latest rounds of price hikes this past week, but buyers and sellers were already talking about the possibility of further increases.
Flint Hills Resources added 7 cents per gallon to posted prices for its three light grades and a nickel to its 200 and 600 solvent neutrals, effective Aug. 5. All other big paraffinic producers had previously announced increases, with most following that same general pattern.
On the naphthenic side, Ergon last week announced across-the-board increases of 6 cents per gallon, effective Aug. 16. Other pale oil suppliers had already raised prices.
Prices on both sides of the market have risen several times this year, but sources said upward pressure remains, especially for naphthenics. Several naphthenic suppliers have reported turning away business. Sources say the market has tightened, partly because of crimps in supply, but also because of growing demand.
We expected things to get a little tighter, but Ive been very surprised at how fast it happened, one marketer said. Part of what were seeing now is that some [customer markets] are having legitimate economic growth.
Observers said pricing momentum for paraffinics is also upward, although the likelihood of more markups was seen as dependent on crude oil costs. The price of crude on the New York Mercantile Exchange closed yesterday at $44.42 per barrel, 27 cents higher than a week earlier. During the day the price set a new record for the Exchange of $45.04. Some analysts say odds are now good that crude will top $50 per barrel.
If crude keeps going up, a base oil buyer moaned, Im sure that base oils will, too.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.