Domestic Group I base oil price hikes cannot be passed on - buyers

26 March 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European Group I domestic base oil buyers will struggle to pass on recent price rises because of sluggish demand in the downstream finished lubricant sector, sources said on Tuesday.

Domestic base oil spot prices have moved up this week on both the barge and truck market.

Producers are raising prices, keen to improve margins after a long stretch of them being under pressure.

Distributors are looking to do similar, based on higher replacement costs.

Certain domestic base oil buyers, however, are dismayed and say passing on these increases downstream will be a major challenge as finished lubricant demand remains lacklustre.

“We have no chance of passing them on,” said a northwest European buyer.

Ongoing winter weather conditions have impacted sales into certain industries, such as the agricultural sector.

European domestic solvent neutral (SN) 150 spot prices (volumes of 500 tonnes and above) were assessed up $15/tonne (€12/tonne) this week at $1,065-1,095/tonne FOB (free on board) NWE (northwest Europe) this week, by ICIS.

Domestic spot truck SN150 prices were assessed up €15/tonne at €830-870/tonne FCA (free carrier) NWE.

 ($1 = €0.78)

By: Carl Roache
+44 20 8652 3214

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