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January 22, 2020

Volume 3 Issue 8

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U.S. Base Oil Price Report

ExxonMobil, HollyFrontier, PetroCanada, Avista Oil, Paulsboro and SK will be increasing prices on the heels of similar movements initiated by a number of paraffinic base oil producers a week ago. Calumet will be lifting the price of its API Group I bright stock this week as well.

According to reports, ExxonMobil will be increasing all of its base oils, including its Group I (Americas CORE base oils) and Group II/II+ (EHC base oils), by 20 cents per gallon, effective Jan. 24.

Calumet already increased the price of its Group I and II base oils by 25-30 cents/gal on Jan. 21, but has announced that the company will now be raising the price of its Group I bright stock, which had been left intact last week. Calumet's bright stock (Calpar 2500) will be marked up by 20 cents/gal, effective Jan. 24.

HollyFrontier will be lifting its Group I postings by 20 cents/gal across all grades, including bright stock, with an effective date of Jan. 27.

Paulsboro will be increasing all of its Group I grades by 20 cents/gal on Jan. 29. The Price Table below will be revised to reflect these changes next Wednesday, which is when the increases go into effect.

SK communicated that the company will raise its Group II bright stock price by 20 cents/gal, effective Jan. 27, but it is not adjusting its Group II+/III postings at this time.

Earlier this week, PetroCanada communicated that the company had raised the price of its Group II 70-200N base oils by 30 cents/gal and its 350-650N grades by 25 cents/gal on Jan. 17, while the producer's Group II+/III will remain unchanged for the time being.

Rerefiner Avista Oil also marked up its Group II grade by 30 cents/gal on Jan. 17.

Last week, Motiva, Chevron, Excel Paralubes and Calumet had communicated price increases in a range of 25-30 cents/gal, with effective dates peppered between Jan. 13 and Jan. 21.

The increases were mostly prompted by firm crude oil prices and tightening supply, sources said. While availability of the mid to heavy-viscosity grades was still ample, spot supply of the light-vis cuts has decreased due to steady domestic demand, export shipments, and a turnaround at the Excel Paralubes Group II plant in February.

Furthermore, producers expected demand to pick up at the end of January and early February as consumers start preparing inventories for the busy spring season.

Excel Paralubes will be replacing the catalyst at its 22,200 barrels per day Group II plant in Lake Charles, Louisiana, and the maintenance work will likely take the unit out of commission for most of February, but the producer expects to meet its contract commitments as scheduled.

On the naphthenic side, Ergon has scheduled a routine turnaround at its plant in Vicksburg, Mississippi, starting on March 5. "In addition to necessary maintenance and upkeep, Ergon is reinvesting in process safety and reliability improvements to ensure longevity of systems and operations," Ergon noted in a statement.

The turnaround process will last a total of 26 days. Customers should not expect any supply disruptions during this planned maintenance period, the company added. The Vicksburg plant has capacity to produce 22,000 barrels per day of naphthenic oils, according to Lubes'n'Greases' Guide to Global Base Oil Refining.

Additionally, it was heard that LyondellBasell had halted production at its naphthenic base oil plant in Houston, Texas, last August and there were no indications that the plant would be restarted any time soon.

Market observers noted that the paraffinic base oil price increases in the United States would potentially be opening the gate for imports to the Americas from Asia, as Asian base oil prices remained soft.

Sources mentioned that there might be attempts by South Korean and Taiwanese producers to ship product to Brownsville, Texas, for the Mexican market, as had been the case with a couple of cargoes last year. The U.S. exported significant amounts of base stocks to Mexico and Brazil in 2019, and these markets were expected to remain large importers in 2020 as local production is not sufficient to cover requirements.

Buyers and sellers also said that they were tracking crude oil and feedstock price movements closely, as geopolitical tensions and economic indicators had caused large swings over the last few weeks. Base oil margins have been squeezed for some time and suppliers commented that it was high time to adjust values, following almost eight months of flat postings. Some increases were starting to emerge in the downstream lubricant and additive segments as well.

Crude oil futures slipped on Tuesday as abundant supply and increasing shale production in the U.S. offset concerns over output disruptions in Libya, and about the spread of the coronavirus, which Chinese health officials were trying to contain, and was expected to cause an economic slowdown in that country.

On Tuesday, Jan. 21, West Texas Intermediate futures settled at $58.34 per barrel on the CME/Nymex, and had closed at $58.23/bbl on Jan. 14.

Brent futures for March delivery were reported at $64.59/bbl on the CME on Jan. 21, from $64.49/bbl on Jan. 14.

Light Louisiana Sweet crude was not traded on Jan. 20 due to the Martin Luther King Jr. holiday in the U.S. LLS had closed at $61.92 on Jan. 13, according to the Energy Information Administration.

Lubes'n'Greases Publications shall not be liable for commercial decisions based on the contents of this report.

Historic and current base oil pricing data are available for purchase inExcel format.