The Winds of Change
After several months of fairly tumultuous and heated market conditions—with monthly posted price adjustments and product shortages keeping players on their toes—it seems that the United States base oils industry has started to feel the chilling effect of a winter breeze, settling into a more tepid but manageable pattern.
Supply of several grades has improved. While producers have initiated a few rounds of increases, they have come after a long hiatus of not seeing any general price movements, except for decreases on spot transactions.
On the paraffinic side, Chevron communicated a posted price increase on its API Group II grades, lifting them by 12, 15 and 20 cents per gallon on October 19. The initiative was driven by steeper crude oil and feedstock prices, squeezed margins, tight base oil supply, and rising transportation, labor and energy costs. The higher increase amount of 20 cents was applied to the heavy-viscosity grade—which appeared to be the tightest—while the lighter cuts were more readily available.