U.S. naphthenic base oil suppliers completed another round of price hikes this week. Observers said it remains a sellers market, with supply still tight and at least three producers planning shutdowns in the next few months.
San Joaquin Refining Co. on Monday announced an across-the-board increase of 10 cents per gallon effective on volumes delivered on or after Nov. 1, even on orders already placed. Citgo said it will raise its naphthenic prices by an equal amount the same day. Ergon, Calumet and Nynas had already imposed markups following Cross Oils 10-cent increase, announced Oct. 4.
Prices for naphthenics have risen even faster than those for paraffinic base oils this year, with suppliers attributing the hikes to higher costs plus the tightening of supply since Shell exited the market last year.
Observers said this week that pale oils still face upward pricing pressure. Crude oil costs are higher since the latest round of hikes began, and supply remains tight, especially for light grades. The situation is more ominous in light of the upcoming turnaround season. Cross plans to close for maintenance for two weeks in December, and Ergon and Citgo will both shut down in January.
Sources called it unusual for that many plants to go down in one season. They added that suppliers will have an especially difficult time building inventories ahead of the turnarounds, given the tightness of the market. Some producers are reportedly already limiting sales.
There is a real concern about the markets ability to meet demand with these turnarounds coming up, one supplier said. The only good thing about it is that demand usually slacks off that time of year.
Posted prices for paraffinic base oils were unchanged this week. The price of crude oil on the New York Mercantile Exchange closed at $53.25 per barrel yesterday, 74 cents higher than a week ago.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.