Motiva Announces Decrease on Posted Base Oil Prices
Motiva Enterprises announced a decrease in the posted price of base oils. The price adjustments are as follows and retroactive on April 3, 2023:
- Group I 100N: -30 cpg
- Group II 200 and 600: -40 cpg
- Group III: -25 cpg
While some say Motiva’s adjustment was unexpected, others are not surprised considering the volume of export base oil available. In addition, there has been notable discounting of domestic supply. Further, Chevron and SK enmove dropped base oil postings two weeks ago and when one moves, history has shown that others soon follow.
As illustrated in the chart at the right, 2023 has been extraordinarily quiet in terms of announced price changes in base oils, additives and finished lubricants. Importantly, however, while JobbersWorld is aware of only two officially announced decreases in the price of finished lubricants, prices have been trending down (significantly for some products) over the past four months.
The downward pressure on finished lubricant prices is due to soft demand, and what many distributors say is very aggressive pricing by some majors. It is believed some majors are dropping prices to regain the market share lost when they run low, or simply out of product last year due to interruptions in additive supply. There was considerable supplier switching during that time as a result of allocation and stock outs for some major brands. This was particularly notable for HDEO, PCMO, and some gear oils.
Interestingly, marketers say that majors engaged in such discounting are focusing the price reductions on their second tier HDEOs and PCMOs rather than their marquee labels.
So, while Motiva’s announced base oil price decrease offers blenders relief, it’s important to consider that margins have compressed significantly this year due to the intensity of competition. In addition, inventories are high as a result of soft demand. With that, questions remain as to how finished lubricant market prices will respond to Motiva’s adjustment.
Note: Chevron’s base oil decrease was effective on March 28, 2023. The posted price of Chevron’s 100N was decreased by 30 cpg, and its 220 and 600N dropped by 40 cpg.