24 July 2013 17:00 [Source: ICIS news]
LONDON (ICIS)--Domestic South African base oil prices in rand (R) are expected to increase in August, sources said on Wednesday.
One distributor said it expects to see gains of around R0.30/kg ($31/tonne) on all grades.
The increase is expected because of the loss in value suffered by the rand during May, of around 11%.
This devaluation increased the cost, in rand terms, of imports, which are purchased in dollars, and so sellers increased their rand sell-on prices to compensate.
However, sellers only implemented gradual price increases so as not to deter buyers, and sources say the roughly 11% drop in value of the rand has not yet been fully compensated for.
Furthermore, the market is fairly tight, with one source calling it a suppliers market. Suppliers are expected to increase rand prices even beyond the level at which they will compensate for the devalued currency.
Distributors said that, some hesitation aside from a handle of automotive lubricant blenders, the price increases in June and July did not deter buying interest.
($1 = R9.71)
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