Focus story by Judith Taylor
HOUSTON (ICIS)--US Group II, II+ and Group III base oil posted prices are lagging changes in the Group I tier, sources said this week.
ExxonMobil’s 23 May increase to its posted prices for Group I and Group II+ surprised some market players, but other Group I producers reviewed options and elected to also announce posted price increases between late May and early June.
Most market participants said that the Group I increases are being driven by tight supply of heavy grades that became snug over several months as refiner production choices leaned towards more fuel output and less base stock due to poor base oil margins.
In Group II, Chevron and Calumet announced posted price increases, with Chevron moving up 10 cents/gal on all grades effective 27 May and ?xml:namespace>
Phillips 66 and Flint Hills Resources (FHR) have not announced any price changes in Group II base stocks as of 12 June, with a similar sidelined position taken by Motiva in this tier.
Group II+ producers are ExxonMobil, SK Lubricants and Phillips 66, with ExxonMobil having made its announcement at plus 8 cents/gal on its product in this tier at the same time it announced on Group I, but Phillips 66 and SK Lubricants have not announced.
The same situation as Group II+ exists in Group III, where the two producers, SK Lubricants and Phillips 66, have not made price changes.
The patchwork price announcements are somewhat unusual because US base oil producers typically join in price moves, although often at different change levels and at different effective dates.
Phillips 66 and FHR are said to be working towards a significant maintenance turnaround at the 22,200 bbl/day Excel Paralubes Group II base oil facility in
The turnaround was slated to begin late May and last about 58 days, but downtime has been delayed by some equipment needs, sources said.
The maintenance is now expected to move into downtime imminently, taking considerable volumes of oil output from the market.
Market expectations continue to be that posted prices are likely to rise in all tiers, but at mid-June, Groups II, II+ and III still lag Group I.
“We are puzzled as to why the other producers are holding back,” one Group I source said.
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