NPRA: Another Bum Quarter

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U.S. lubricant sales volumes in the third quarter of this year fell 10 percent compared to the same period in 2007, according to the latest sales data from the National Petrochemical and Refiners Association. The automotive manufacturing sectors woes could be one likely cause, an industry expert said.

The NPRAs Quarterly Index of Lubricant Sales released Dec. 2 showed volumes in decline across all sectors compared to a year earlier, with the steepest decreases in grease and process oils.

The report uses 2006 as the base year. An index value of 100 represents the average quarterly volume for 2006. The 2008 third-quarter index value was 88.3, compared to 98.1 for the third quarter in 2007.

The association noted that it restated data for 2006 and 2007 because of a change in the reporting population. Its recently released Annual Report on 2007 U.S. Lubricating Oil and Wax Sales did not include data from ExxonMobil for the first time in three decades. NPRA did not return phone calls inquiring whether ExxonMobil was also no longer part of the quarterly indexs reporting population.

In the third quarter, the automotive segment fell 7.4 percent to 95.1, compared to 97 in 2007s third quarter. For January through September, automotive lubricant sales declined 5.9 percent to 92.1, down from 97.8 a year earlier.

U.S. demand for industrial lubricants and commercial lubricants tend to follow the economy, said Tom Glenn of market research and consulting firm Petroleum Trends International, Metuchen, N.J. The third quarter saw a significant cooling in the economy, he added.

The struggles of U.S. automotive manufacturers are front page news. Its not a secret that their sales are down significantly, and theyre struggling, Glenn told Lube Report. When sales are down, theyre going to use less lubricants themselves, but its not just the automotive manufacturers impacted. Those vendors making nuts and bolts, those who are making tires, everything associated with automobiles is affected. Metalworking fluids and greases are also impacted by the decline in automotive manufacturing.

Elsewhere, NPRA data shows grease sales fell 9.5 percent to an index value of 85.6 in the third quarter, compared to 94.6 in 2007s third quarter. Through the first three quarters of 2008, grease sales also declined 9.5 percent to 84.2, compared to 93 in the year-earlier period.

Industrial lubes fell 7.1 percent to 93.1 in the third quarter, compared to 100.1 in 2007s third quarter. Through the first nine months, industrial lubes posted an index of 94.4, down 3.7 percent from 98.1 in the year-ago period.

Process oils sales dropped 19.2 percent to 80.9 in the third quarter, from 100.1 a year earlier. Through 2008s first three quarters, process oils had an index of 94.4, down 7.9 percent from 102.4 in the year-earlier time frame.

Glenn emphasized a significant amount of process oil goes into the tire and rubber industry. So if you have a reduction in automotive manufacturing, youre going to have a reduction in the process oils, he noted.

The downsizing of the U.S. chemical industry is also impacting demand for many related products, he added, including industrial oils and process oils.

NPRA has emphasized that its quarterly reports are for use as a gauge of market trends, rather than a measurement of total sales, because relatively few marketers participate. The associations member companies that report quarterly data are refiners as well as marketers that represent more than 65 percent of the lubricants volumes reported for NPRAs more comprehensive annual report on lubricating oil sales. The quarterly data as a percentage of the annual reported volume is somewhat higher for automotive lubricants, but lower for industrial lubricants, process lubricants and grease volumes.

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