In late March, the forecast for the base oil market called for spring skies with a chance of price revisions during the following weeks, based on historical price behavior and the rise in crude oil values. Most market players expect spring activity to result in copious orders, which typically exert upward pressure on base oil values.
This year was no exception, as revived purchase levels, together with escalating feedstock and transportation costs, precipitated a deluge of base oil posted price increases, starting in mid-March.
The initiatives were spearheaded by Motiva, which increased itsAPI Group II postings by 10 cents and its Group III values by 5 cents per gallon on March 14.
Other producers soon followed suit, with Excel Paralubes, Chevron, Kleen Performance Products, Avista Oil, ExxonMobil, HollyFrontier, Petro-Canada, Calumet, Paulsboro and SK all communicating markups between 5 to 25 cents per gallon, depending on the grade and the supplier.
Several naphthenic price hikes emerged within the same timeframe.Cross Oil, Ergon, Calumet and San Joaquin Refining Co. increased prices by 10 to 15 cents per gallon between March 22 and 29.
No sooner had these increases been implemented when Motiva stepped out with a second round of hikes, calling for increases of 25 to 30 cents per gallon for its Group II and III base oils, effective April 9. Other producers announced similar markups fairly quickly.
The base stock hikes prompted adjustments for finished lubricants, greases and additives, with major oil companies announcing increases of up to 6 percent and several smaller blenders lifting prices by around 5 and 8 percent, effective early May.
The market also experienced transportation disruptions caused by a four-day closing of the Houston Ship Channel, while flooding in the Midwest forced suppliers to switch from rail to truck transportation as railway tracks were under water. (See Page 58.) By early April, the issues seemed to be mostly resolved, though delays lingered.
A fire that broke out at ExxonMobils refinery in Baytown, Texas, in late March was quickly extinguished. The refinery, which houses a 28,000-barrel-per-day Group I and II base oil plant, was conducting maintenance on its largest crude unit at the time.