Theres no limit to how complicated things can get, on account of one thing always leading to another, penned American writer E.B. White. His quote seems to describe what has been going on in the base oils market recently.
About 20 years ago, keeping track of base oil pricing was quite simple-there were only a handful of producers, and these were mostly manufacturing API Group I or naphthenic oils.
Nowadays, the industry commonly deals with many more base stock categories, and there are numerous participants involved, each with its own idiosyncrasy, operating method and business philosophy.
Price movements have become more complex, too. When posted base oil prices first started to appear in industry publications, there were typically few fluctuations during a given year.
Fast forward to todays posted price scene, and the picture gets quite complicated, with producers often revising values by dissimilar amounts with varying implementation dates throughout the year.
Between January and early March, for example, paraffinic base oil suppliers had already adjusted posted prices twice on account of rising crude oil and feedstock values, and a balanced to tight supply-demand situation.
During the first round of price hikes, paraffinic base oil postings increased by 10 to 24 cents per gallon, with implementation dates peppered throughout January.
A second string of price initiatives followed closely, with producers marking up prices by 15 to 22 cents per gallon. The implementation dates fell between January 31 and March 1.
On the naphthenic front, producers were less active, lifting prices by 20 cents per gallon across the board only once in the same time frame.
A number of buyers commented that it had been difficult to follow all of these price movements and that absorbing the hikes in downstream segments had not been easy either.
The higher raw material values triggered a number of finished lubricant and additive price hikes, which were implemented throughout February and March. But as one thing leads to another, repercussions in other areas such as demand levels and the choice of product sources can also be expected.