12 January 2010 18:35 [Source: ICIS news]
HOUSTON (ICIS news)--Higher crude oil and vacuum gas oil (VGO) costs pushed many US Group II base oil sellers to lift posted prices by up to 10%, the first increase in more than six months, players said on Tuesday.
Motiva, Flint Hills Resources (FHR) and Chevron issued posted price increases this week, according to base oil buyers. It remained to be seen if the other Group II sellers, ConocoPhillips and Calumet, would also issue price hikes.
The largest of the Group II base oil sellers, Motiva, lifted posted Group II and Group II+ base oil prices by 10-30 cents/gal ($30-90/tonne or €21-62/tonne), effective on Monday, its buyers said.
Motiva’s posted price for Group II 600-viscosity oil was $3.11/gal FOB (free on board) US Gulf prior to the hike, according to data from global chemical market intelligence service ICIS pricing
The last posted price hike by Motiva was on 10 July. At that time, crude oil traded in a range of $59-69/bbl in just a four-week period. Feedstock VGO was just as volatile, trading for $1.52-1.74 for high-sulphur VGO and for $1.58-1.77/gal for low-sulphur VGO.
Sellers said the new January hikes were driven by the change in feedstock prices since the last price change.
“The hikes are somewhat driven by improved demand, but mostly by the increased feedstock costs, which are eating into refiner margins,” a seller said.
“With crude prices at more than $80/bbl and VGO prices rising above $2.15/gal, the refinery economics just can’t work anymore,” another seller said.
A large-volume buyer said that demand had not yet returned to 2008 levels but it had picked up.
“We are not seeing or expecting the collapse of 2009 to repeat, but demand is weak compared to 2008,” a buyer said. “Many players kept inventories low last year but will be more confident about buying this year as the economy improves.”
($1 = €0.69)
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