09 December 2010 19:30 [Source: ICIS news]
HOUSTON (ICIS)--Tight supply and higher crude oil costs drove price increases for several paraffinic base oils by up to 10% in the Americas market this week, the first hikes in more than six months for several suppliers, market participants said on Thursday.
ExxonMobil increased its light grades by 25 cents/gal ($75/tonne or €56/tonne), its 600 viscosity by 30 cents/gal and its brightstock by 20 cents/gal, according to its customers. ExxonMobil’s Group II+ postings rose by 25-30 cents/gal, all effective on 7 December.
Other Group I suppliers, including Holly, Valero and Calumet, also moved prices up at similar levels with varying effective dates in December.
ConocoPhillips moved prices up for the first time since May. Group II grades increased by 25-33 cents/gal, and its Group II+ and III grades rose by 30 cents/gal, effective on 3 December.
Group II supplier Flint Hills Resources (FHR) raised its 70, 75 and 600 grades up by 30 cents/gal and its 100 and 230 up by 27 cents/gal, effective on 7 December. This is FHR’s first hike since 14 May.
West coast seller Chevron moved prices up by 25-30 cents/gal, effective on 8 December.
Group III and III+ base oil supplier SK Lubricants raised all grades by 30 cents/gal, effective on 8 December. SK Lubricants' last increase was in June.
Group III demand has been greater than supply in 2010, and market participants expect this to persist in 2011. Group III demand has grown because tighter automotive engine oil standards for finished lubricants are pushing demand for higher-quality base stocks.
The hikes follow an increase by the largest Group II supplier, Motiva, a week ago.
Price increases were mainly supply-demand driven as the market remained tight even in December, and the situation may tighten further during first quarter 2011. Continued strong domestic and export demand was keeping supply snug in December, a seller said.
“Supply constraints for the base oil market have been an ongoing issue all year,” a buyer said. “It began with low operating rates and reduced production when we were all restocking, then there were production issues and a number of allocations and now it is just catch-up time.”
Holly, American Refining, Chevron and Motiva issued sales allocations during the year.
All refiners are operating and allocations have been removed, but many suppliers are still trying to catch up on delayed orders for most of the year, a trader said.
Both Group II sellers Motiva and ConocoPhillips will be in a planned maintenance turnaround during the first quarter, which will limit supply further at the start of 2011.
Steady high costs of feedstock crude and vacuum gas oil (VGO) also drove up the prices. The benchmark West Texas Intermediate (WTI) crude oil was trading at around $70/bbl in June, when the last hikes took place. WTI has been hovering around $88/bbl in the last few days.
To discuss issues facing the chemical industry go to ICIS connect
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections