A long list of major oil companies and smaller and independent suppliers have announced finished lubricant price hikes in recent weeks, as high as 11 percent, citing in their notification letters to customers factors such as rising costs for raw materials and operations, factors that show signs of continuing.
Some of the markups have gone into effect, with others taking effect later this month or in January.
To control pre-buying ahead of the price increases, most companies are limiting orders shipped through the last business day before the effective date of the price hike to a designated percentage (110 percent in most cases) of average monthly purchases, to be invoiced at current pricing. In addition, most also stipulate the requested delivery date cannot exceed the normal lead-time for any item on the order.
Valvoline on Dec. 6 informed customers it would increase prices by up to 11 percent on all lubricants and greases effective Jan. 21. In its letter, the company said it was adjusting prices as a result of continued cost increases for base stocks, additives, raw materials and transportation.
BP Lubricants USA, owner of the Castrol brand, on Nov. 29 announced increases averaging 2 percent to 10 percent, effective Jan. 28, on all passenger car, commercial, industrial and ancillary products in all package types.
ConocoPhillips in a Nov. 16 letter informed customers it would raise prices for all its lubricants by 5 percent to 9 percent effective Dec. 21. The company said it is limiting marketer orders to 125 percent of the defined base volume over a prior 12-month period.
ExxonMobil on Nov. 19informed customers ofhikes averaging 3 percent to 8 percent on conventional and synthetic lubricants and greases, effective Jan. 1, according to industry sources. … Base oil prices have continued to rise, and the cost of packaging and lubricant additives continue to increase, all of which impact the prices of our lubricants and greases, the company advised customers.
Citgo on Nov. 19 stated it would raise prices by up to 10 percent effective Jan. 1 on all brands of finished lubricants, including bulk. Rapidly increasing raw material costs have necessitated this increase, the company explained in the letter.
Shell Lubricants Nov. 13 notice announced a price increase of up to 10 percent effective Jan. 14. In the letter, Shell attributed the adjustment to increasing costs of raw materials used in the production and delivery of products. The company said it maintained the right to limit or allocate customer purchase quantities to ensure equal supply opportunity across its customer base. It also reserved the right to cancel any orders exceeding 110 percent of prior-year monthly liftings.
Chevron Products Co. on Nov. 9 announced increases, effective Dec. 10, averaging 5 percent to 9 percent on lubricating oils, and averaging 3 percent to 5 percent on all gear lubes and greases. In the letter, Chevron said, The increase is being driven by the continuing rise in the cost of crude oil, which impacts all components in the manufacture and transportation of lubricants and greases.
Smaller U.S. lubricant suppliers are also making their move. Among those announcing price hikes on finished lubes were Warren Oil, Safety-Kleen and Cam2 International.
On Nov. 30, Safety-Kleen announced it would hike prices on its finished products an average of 8 percent to 10 percent effective Jan. 1. The industry has seen continued base oil increases in addition to a recent increase in the cost of our additives, all of which have an effect on the cost of our finished products, Safety-Kleen said in the letter.
Warren Oil on Nov. 9 said it would up prices on all bulk products by 20 cents per gallon, effective with orders received after Nov. 26. The companys letter noted that it had received increases from all of its base oil suppliers during the two weeks prior to Nov. 9.
Cam2 International on Nov. 9 announced a bulk oil price increase of 20 cents per gallon effective with orders placed after Nov. 23. Thank you for your continued business and your understanding in this volatile market where raw material and freight costs continue to escalate, Cam2 wrote its customers.
An official with one lube distributor in the Northeast said some major oil suppliers indicate their base oil profits are healthy now, but that they cant pass up joining in on the finished lubricant price hikes. None of it makes sense, the distributor said. They really dont need the price increase this time around.
The source acknowledged that the price hikes in recent years had helped distributors get through tough supply situations. All those price increases over a year ago and three years previous to that really did help the business, the official said. We were able to grab a little bit here and there, and theres a correction in the industry that actually made that happen. I just hope they dont get greedy with it.
As long as its industry-wide, it keeps the competition level around the same, a Western U.S. distributor said. Obviously, theres no positive effect on our marketing. We almost waded through the year without an increase.
The distributor noted that business construction is off in most regions of the country and that other segments like passenger car motor oils and the installer trade also seem to be down. Certainly this is not going to help, the distributor said. Its just going to continue to worsen as far as volume is concerned.
Were going to need them, a lubricant blender said of the price hikes, noting the rising costs for base oils. This official said that while customers balk at price increases, they are aware of whats happening in the petroleum industry. I think everybodys used to it by now, the source said. I dont think customers have too many problems with it. Theyve seen it at the gas pumps.