Price Increase Roundup
Independent lubricant manufacturers are the first and the fastest to move on price in the latest round of increases.
Independent lubricant manufacturers kicked off the most recent round of lubricant price increases with Sinclair’s announcement on May 8th of a 10 to 12% adjustment effective July 1, 2018. By the end of May most independents followed with announced increases. ExxonMobil was the first major to move with an announcement coming on June 1. TOTAL followed on June 8th and a within 26 days all other majors announced price increases. Most of these increases came in the first two weeks of June. A timeline of the recent round of prices increases is shown below.
In all cases, when reasons are given for the price increase, the drivers are said to be increases in the cost of base oils, additives, packaging, and transportation.
In addition to being the first to move, independent lubricant manufacturers also moved more quickly than the majors in this round of price increases. As shown below, whereas there is an average of 16 days from the time independents announced an increase to its effective date, the average distance for the majors is 34 days.
|Average price increase (announced)||7.3%|
|Average time from announcement to effective date||22 days|
|Independents: Average time from announcement to effective date||16 days|
|Majors: Average time from announcement to effective date||34 days|
According to some of the independent lubricant manufacturers JobbersWorld has spoken with, independent lubricant manufacturers are often the first to move and have less lead time then the majors due to their tighter margins. In addition, whereas majors generally purchase base oil under contract, some independents source from the spot market. Consequently, they have to respond relatively fast to maintain margins when base oil prices increase, as seen over the past few months shown below.
In addition to the base oil price increases already seen in 2018, there has been an increase in the price of lubricant additives. The first was announced on May 18th by Afton when it advised its customers that effective June 18, 2018, it will increase prices on all performance additive products from all source points. The price adjustment is said to be in response to higher raw material and transportation costs.
Lubrizol followed on May 29 when it announced a price increase that varied across product areas and specific product families effective July 1, 2018. Lubrizol attributes the increase to the higher cost of raw materials resulting from robust demand and continuing consolidation and closure of capacity. In addition, the price adjustments are said to be necessary due to significant increases in transportation costs.
It should be noted that the higher than typical number of lubricant price increases we have seen so far in 2018 are reflected in the comparatively steep ramp up shown below in the Producer Price Index (PPI) for Petroleum Lubricating Oils and Grease Manufacturing (NAICS 324191). The PPI is an index published by the Bureau of Labor Statistics that measures the average change in the selling prices received by domestic producers for their output over time.
Recently Announced Lubricant Price Increases
|Company||Announced Date||Effective Date||Increase|
|Sinclair Lubricants||5/8/2018||7/1/2018||10 to 12%|
|Sunoco||5/16/2018||6/16/2018||4 to 6%|
|Advanced Lubrication Specialties||5/16/2018||6/16/2018||4 to 6%|
|CAM2||5/18/2018||6/16/2018||4 to 9%|
|Smitty’s Supply||5/18/2018||6/16/2018||4 to 9%|
|U.S. Lubricants, Commerce, CA||5/18/2018||6/17/2018||$0.40/gal lubricants
|Chemlube||5/22/2018||6/11/2018||5 to 9%|
|Maverick Performance Products||5/22/2018||6/18/2018||4 to 8%|
|Allegheny Petroleum Products||5/23/2018||6/18/2018||6 to 8% on bulk, additional 2% on drums and totes|
|Warren Distribution||5/23/2018||6/25/2018||4 to 8%|
|PennStar||5/23/2018||6/15/2018||6 to 10%|
|Martin Lubricants||5/23/2018||6/22/2018||5 to 9%|
|Old World Industries||5/24/2018||6/30/2018||4 to 9%|
|ExxonMobil||6/1/2018||7/1/2018||up to 9%|
|TOTAL Specialties USA||6/8/2018||7/1/2018||4 to 6%|
|Nu-Tier Brands/Gulf/ECOSE||6/11/2018||7/13/2018||6 to 8%|
|Shell||6/13/2018||7/16/2018||up to 10%|
|Reliance Fluid Technologies||6/13/2018||7/16/2018||4 to 8%|
|Lubriplate||6/13/2018||8/13/2018||Mineral oil-based Lubricants by 7%, Synthetic/Long-life lubricants by 4%|
|Chevron||6/14/2018||8/1/2018||up to 9%|
|Safety-Kleen||6/15/2018||7/16/2018||up to 9%|
|Valvoline||6/19/2018||8/1/2018||up to 9%|
|Phillips 66||6/22/2018||7/23/2018||up to 9%|
|Calumet Branded Products||6/25/2018||7/25/2018||up to 10%|
|Castrol North America||6/26/2018||8/6/2018||up to 9%|