Lubrizol announced it will increase the price of its additives in most product segments by 7% effective March 20, 2017.
Infineum USA announced an increase for most of its lubricant additives by up to 4%. The Infineum increase is effective February 27, 2017. Both Lubrizol and Infineum attribute the increases to significantly higher cost of raw materials.
For those unfamiliar with lubricant blending, additives (DI and VI) account for roughly 15% of the volume of material used to make a quart of motor oil and roughly 50% of the additive is base oil used as a diluent/carrier for the additives. Based on the recent increases in the price of base oils alone, it becomes clear why additive prices are moving up. Factors driving the increases become even more apparent when one looks at how the price of other raw materials used in additive manufacturing have risen over the past year.
When taken together, the recently announced increases in the price of base oil and additives are pushing the price of finished motor oils up by roughly 40 to 50 cpg in the first quarter of 2017. But the higher cost of base oil and additives alone do not tell the full story. This is because lubricant manufacturers are also seeing higher costs on packaging, transportation, and other raw materials and operating costs.
So hang on to your hat. It looks like 2017 is off to an interesting start.