A Summer Few May Want to Remember
The summer of 2020 has been memorable, but not in a good way. Instead of family trips and barbecues with friends, most people will probably associate it with the coronavirus pandemic.
The disease first raised its ugly head in the United States back in January, and has impacted most aspects of daily life, as well as the base oils industry.
Positive signs in late May related to a leveling off of coronavirus cases led to a reopening of businesses, following government mandated lockdowns. But by late June, many states had reversed these openings due to new infection spikes, and the country registered growing unemployment figures.
The population’s reduced mobility prompted limited use of personal cars and public transportation, resulting in disappointing fuel and lubricant consumption in July, a month that typically sees driving rates increase.
Market participants acknowledged that the industry environment was very challenging. There was also price pressure from firm crude oil and feedstock costs, while base oil availability had tightened.
Against a backdrop of great uncertainty, a number of base oil producers ventured out with price increases.
In the naphthenics camp, Cross Oil, Ergon, Calumet and San Joaquin Refining increased prices by 20 to 25 cents per gallon, with implementation dates on July 31 and August 4.
On the paraffinic side, there were reports that ExxonMobil had communicated posted price increases of 15, 25 and 30 cents per gallon, depending on the grade, for its API Groups I and II and Group II+ cuts, effective August 10. Paulsboro intended to implement similar increases for its Group I cuts on August 13, while rerefiner Avista Oil raised its Group II+ grade by 15 cents, effective August 3.
However, at the time of writing, it remained to be seen whether the proposed paraffinic base oil increases would be pushed through in their entirety, since there was temperate market support for the increases, and other producers had not followed with announcements of their own. This type of uncertainty permeated most of the industry’s activities and set the stage for the following weeks.
While there were several momentous events this summer worthy of remembering—such as the first successful crewed commercial space flight or the launch of the Perseverance rover to Mars—there were many circumstances that people would prefer to forget.
Gabriel Wheeler is base oil editor for Lubes’n’Greases. Contact her at Gabriela@LubesnGreases.com.