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Base Oil Report


With the arrival of spring, activity everywhere seems to revive, and both people and businesses see opportunities to usher in changes and take advantage of a generally more positive mood.

Likewise, in the U.S. base oils market, a flurry of posted price increases for paraffinic and naphthenic oils was introduced between mid-April and mid-May on the back of heightened interest, a tight supply/demand balance and firm feedstock costs.

In the API Group I category, producers implemented 15- and 20-cent-per-gallon hikes, with bright stock moving up by the lower amount.

The increases within the Group II tier were more varied, with producers lifting prices by 8, 10, 11, 12, 15 and 20 cents/gal, depending on the grade and supplier.

Group II+ producers implemented hikes of 15, 18 and 20 cents/gal, and Group III base oils edged up by 19, 20 and 21 cents/gal.

Increases were also set in motion on the naphthenic front, with Ergon and San Joaquin Refining announcing 15-cent markups for all of their pale oils. These followed similar initiatives by Calumet and Cross Oil, who lifted prices by 15 cents in mid-March.

While increases sometimes inhibit the number of orders that producers receive after implementation, this time most suppliers reported blossoming requirements.

The only deterrent to sales was the lack of availability of certain grades, as a number of recent and ongoing plant turnarounds – both on the domestic and export fronts – had reduced supply levels.

These included a brief shutdown at Ergons Group I/II plant in Newell, West Virginia; a 52-day turnaround at the Excel Paralubes Group II unit in Westlake, Louisiana; and a 22-day shutdown at the Chevron Group II plant in Pascagoula, Mississippi, expected to start last month. Motiva was also heard to be preparing for maintenance at one of its Group II production trains in June.

The upward momentum was anticipated to be maintained while requirements flourished, but orders typically tend to slide in the summer, coinciding with the return to production of most base oil units. A more balanced supply scenario and weaker crude oil values were anticipated to soften some of the shimmering swells buoying prices in the spring.

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