With crude and feedstock values hovering at high levels, most market players anticipated a barrage of paraffinic price increases in the U.S. market this week. The surprise was that just one paraffinic producer, Calumet, stepped out with hikes of 30 cents per gallon for its postings, following Valeros initiative last week.
Calumet alerted its customers that it will boost all neutral grades by 30 cents/gal across-the-board, effective Friday Nov. 6.
As reported last week, Calumet, as well as all other U.S. naphthenic producers, issued price increase notices to their customers outlining hikes of 25 cents/gal for all pale oils. Those higher prices were set to unfold between Nov. 3 and Nov. 9.
Valeros price increases went into effect this past Monday. The company raised all its paraffinic neutrals by 30 cents/gal and upped bright stock by 25 cents/gal.
There is a pensiveness detected in the market. Some players speculate that the lack of posting changes by most of the majors is indicative of poor sales. The answer to that is somewhat complicated, sources lamented. On one side, there continues to be strong demand for heavy vis and bright stock. Conversely, there has been less buying activity for light and some mid vis grades for months, they say. But whether sales are simply poor or producers are keeping low inventories for those grades is difficult to verify.
Many players believe that producers have been operating well below capacity for the better part of this year. They have also suggested that this years uneventful hurricane season has most likely lead to higher inventories at production sites.
Meanwhile, producers are keeping a close watch on upstream developments as crude continues to flirt with the $80 per barrel mark. Other feedstock costs have steadily risen for months. Yet there has not been a major round of posted price hikes since early July, with the exception of the recent moves by Valero and Calumet on the paraffinic side.
For the most part, suppliers indicate that overall sales are on target and in some cases even better-than-expected for this late in the year, usually a time market activity has begun to slow.
Buyers say that requirements are being met in a timely manner, and there have been no delayed shipments for even the harder-to-source spot product such as N 600 to N 700 or bright stock.
At the close of the Tuesday, Nov. 3, NYMEX session, light sweet crude futures ended at $79.60 per barrel, a small gain of 5 cents compared to the week-earlier settlement at $79.55/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.