US naphthenic sellers issue hikes - again

19 March 2008 17:57  [Source: ICIS news]

HOUSTON (ICIS news)--US naphthenic base oil producers stepped out with a second round of proposed price hikes this year of up to 30 cents/gal ($90/tonne or €58/tonne) amid record-setting crude costs, buyers and sellers confirmed on Wednesday.

Producers said they had been absorbing the majority of the record-setting crude oil costs over the last few months with only minimal increases passed down, but could no longer continue to do this.

Base oils buyers indicated they understood the ongoing steep costs of production but were nevertheless reeling from the shock of seeing more price hikes so shortly following increases initiated earlier this month.

San Joaquin Refining issued an increase of plus 20 cents/gal effective 20 March.

Ergon raised the price on all grades by 25-30 cents/gal depending on industry end use, effective on 26 March.

Cross Oil announced a 25 cents/gal increase on all base oil and process oil grades effective on 28 March.

Calumet raised prices on all grades by 25 cents/gal effective on 4 April.

NYNAS would also be raising prices by 25 cents/gal across the board, effective 1 April.

Naphthenic producers refer to the average of crude costs during the past two weeks or monthly periods when calculating their prices with customers, which was why all sellers have announced another increase so shortly after the previous round, a seller said.

The weak US dollar pushed crude oil prices to an all-time high of $110/bbl last week.

The average price for Pale 60 FOB (free on board) US Gulf one year ago was $3.12/gal, according to global chemical market intelligence service ICIS pricing.

The average price on Wednesday was $3.51/gal. In comparison, the price of crude at this time a year ago was $58/bbl.

($1 = €0.64)

By: Heather McGuire Doyle
+1 713 525 2653

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