Rapid changes have vendors and customers in a whirlwind in the lubrication industry. Recently the lubricants business has been experiencing a notable period of changes that are all happening at a very fast pace. This can be seen throughout the past year and half through the various price increases for finished lubricants, two of which have happened within a span of 30 days this past year.
The first increase rolled out in early April with an effective date 30 days later. This increase was credited to the higher costs of base oils and other inputs. While manufacturers and distributors were working on their pricing and putting into effect this increase yet another increase was announced. This put everyone in a very tight spot with limited options. Many decided to withdraw their first increase and roll it into the second. This put the hardship more on the distributors as it was now in their hands to sell an even bigger increase to their customers.
While base oils and inputs were increasing another change came into play, the price of crude oil. Crude oil prices have not been supporting base oil pricing because as base oil pricing is going up, crude oil pricing has begun to go down. This isn’t the only factor affecting base oils, another is the price of ultra-low sulfur diesel. The reasoning behind this is the fact that margins for diesel can sway refineries to produce more of it instead of base oils in turn causing base oils to continue to rise in price. While the price increases can be a hard sell, they are also unpredictable and tend to slip over time. With so many different factors manufacturers and distributors are forced into a guessing game, will the price of one increase while the other decreases, will the price stay? With an ever-changing market it is anyone’s guess.