US base oil producer Motiva drops Group II posted prices

HOUSTON (ICIS)–US Group II base oil producer Motiva Enterprises announced it is dropping its posted prices effective 1 October in a surprise move following reductions in August, buyers confirmed on Tuesday.

“This will rock the market,” one source said.

Motiva’s 1 October posted price reductions will be at a 15 cents/gal drop on the light viscosity base stock, 25 cents/gal down on the mid vis grade and a 45 cents/gal drop on the heavy vis grade.

The reduction puts Motiva’s heavy grade 600 base oils at $3.75/gal effective 1 October.

Sources said the price reduction is driven by sharp market competition arising from increased production capacity in the US that stems from the commercial start-up of Chevron’s new 25,000 bbl/day Group II base oil plant at Pascagoula, Mississippi.

Motiva’s announcement on reductions came as a surprise to many in the market because these so closely followed recent August price decreases.

Motiva decreased Group II posted prices on 15 August, moving its light vis grade down by 10 cents/gal, mid vis by 20 cents/gal and heavy vis by 25 cents/gal on that effective date.

In August other Group II producers elected to also decrease prices, followed by reductions in the Group I tier as well as Group II+ and Group III.

By noon on Tuesday, 30 September, other base oil producers did not verify price changes but were observing the deep shift in price perspective.

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