Diverging Indices - A Bitter Pill to Swallow
Although not necessarily related, today’s announcement that ALS is increasing the price of its synthetic lubricants is a good backdrop for a related story JobbersWorld has been working on. This story speaks to concerns JobbersWorld has been hearing from blenders about a divergence in the commonly used indices for Group III base oil prices, specifically Argus and ICIS Market prices and the ICIS average of contract price postings for four refineries.
According to a number of lubricant blenders, where these indices tracked fairly close in the first quarter of 2021, since then, they have shown notable separation. It has been observed that late in the Q1, the average ICIS Market prices for 4 cSt Group III base oil started to track significantly higher than the other two indices. The divergence occurred at the time the market tightened and non-contract (spot) pricing started to rise significantly.