UpdateMotiva changes course, raises US Group II base oils

11 June 2009 20:20  [Source: ICIS news]

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HOUSTON (ICIS news)--The largest US Group II base oil producer, Motiva, is raising its prices due to a jump in the crude oil market, buyers said on Thursday.

The last time Motiva raised its Group II base oil prices was on 1 July. Since then, the refiner had issued a series of decreases, dropping its prices by some 30% prior to the upcoming hike.

In a letter to its buyers, Motiva said it would raise its Group II and Group II+ base oils by 15-40 cents/gal ($45-120/tonne or  €32-86/tonne), effective on Friday, to reflect increasing feedstock costs.

The Motiva posted price for its Group II, 100/120-grade oil was $1.84/gal before the hike, according to data from global chemical market intelligence service ICIS pricing.

The last move by Motiva was on 1 April, when the refiner reduced prices by 30-75 cents/gal.

Indeed, base oil sellers have been cutting prices since January to maintain competitiveness and to try to increase demand. At that time crude oil prices averaged $30/bbl.

However, crude oil prices have more than doubled in the space of six months, weakening margins and prompting other Group II sellers to recently announce hikes of around 20-35 cents/gal.

Buyers said they expected the hikes since crude oil prices have now more than doubled from the $30/bbl level seen earlier this year. However, base oil demand remains weak since most downstream demand is tied to the automotive sector.

Motiva's hike follows initiatives by other Group II sellers such as Flint Hills Resources (FHR), Chevron, ConocoPhillips and Calumet.

Motiva is the largest Group II supplier, with a 40,300 bbl/day Port Arthur base oil plant in Texas.

($1 = €0.72)

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Author: Heather McGuire Doyle
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