The view from the high performance grease manufacturer

juntai grease
2021-06-17

The market for lubricants varies from year to year, but this has affected many of the Lubricants Grease Factory businesses. Its price continues to go up this year, and the fourth round of price hike is coming!On the topic of this round of lubricating oil prices continued to rise, many senior figures in the industry have written several times to carry out professional analysis, summary of the information is not difficult to see that the main reasons for the rise of lubricating oil are roughly three.


First, upstream crude oil futures quickly rebounded in mid-April after a brief dip. The prices of base oil, additives and other chemical raw materials that drive the whole petrochemical industry chain remain high.


Secondly, due to the global economic downturn, OPEC's production reduction, the production of shale oil in the United States, the slow resumption of production in Texas, the United States and other negative problems have not been fundamentally improved, seriously dragging down the upstream base oil supply of the lubricating oil industry.


Finally, the production raw materials and packaging materials that domestic lubricating oil enterprises reserve at low prices in the second half of 2020 have been exhausted, and the production cost has increased unabated.


Admittedly, some third parties in the industry believe that in the context of sluggish global demand, price increases are more likely to come from capital operations. However, it is an indisputable fact that the processing and manufacturing costs of lubricating oil enterprises have risen, and they will only pass them on to the market when they cannot digest them.


Recently, perhaps as a result of the epidemic, international crude oil prices have again topped $66, and a second expected price cut in refined oil products has been postponed. Many LUBRICANTS Distributors said their regrets would not affect their sales plans for this year. But lubricating grease suppliers, who also follow the price of international oil prices, are hardly so calm.


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In March, a lubricant brand issued a price adjustment letter again: "In view of the severe situation that the cost continues to rise sharply and rapidly, our company has to increase the sales prices of some lubricants and grease products again, with an increase of about 12-15%. This price adjustment will take effect on May 1, 2021". According to the statistics of some dealers, this has been the fourth major price adjustment in this round of market. Considering the "consistent pace" of lubricating oil brands in price adjustment, it is expected that in the coming time, similar price increase notices will continue. High Quality Grease Manufacturer say market price rising and the range of effects are wide, especially High Performance Grease Manufacturer


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The market is like: Established brands are leading the way


Since the previous three price increases have been experienced, this "price explanation letter" did not make the dealers greatly lost.

On the contrary, it has to some extent contributed to the market reshuffle action of dealers and lubricating oil brands.

Dealers said that with the rising prices, dealers will become more cautious in choosing brands to operate.

In a popular way of expression, "only choose good sales, good service".

International brands such as Mobil, Castrol Shell and domestic leading brands such as Sinopec Great Wall Lubricating Oil have high market recognition, good product quality and stable customer base. Dealers are still inclined to continue cooperation even if the price is adjusted.

Conversely, to a few supply fluctuation is big, the small brand with unstable quality, the dealer began to reduce the purchase quantity gradually.

"It is not easy to do the market and establish reputation now. Our dealers also have a lot of investment in the early stage. If we bet on an unstable lubricating oil brand, not only the users will not buy it, but also our own loss will be great."

One dealer captures the current industry mentality.

In addition, some well-run dealers with low inventory pressure quietly hoarded supplies by taking advantage of the time lag before the price rise.

Dealers generally believe that the higher the price, the more we should be alert to some counterfeiting and inferior low-price products to disrupt the market, this pursuit of short-term profits is not conducive to the healthy growth of the industry.


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Base Oil Trend: Supply improved


They have held prices for those goods steady over the past month as buyers have become increasingly resistant to higher prices.

It was observed that the price of base oil goods in the Asia-Pacific market continued to rise during this period.

This trend reduces the attraction of sending more goods to China.

Buyers' resistance to higher prices reflects their refusal or difficulty in passing on higher lubricant prices to the higher cost of base oils or additives.

So their profit margins are being squeezed.

Domestic demand for finished lubricating oil remains stable.

But fierce competition among oil adjusters has offset their use of the advantage of stable demand.

Data show that Thailand's original production of bright oil in the East China region to maintain a higher price.

About 15,800-16,000 yuan/ton (US $2,420-2,451 / ton).

Rising import prices are putting upward pressure on the prices of domestic goods.

Other than cutting back on lube production, oil adjusters have limited alternative resources to reduce demand for bright oil.

The availability of alternative products is also scarce.

It is difficult for importers to lock in Russia's original SN 1200 oil with high viscosity because of the fierce competition from buyers in the Baltic region.

They have been bidding at very high levels.

The price increase of SN 1200 in Beijing area is maintained at the price level of 13000 yuan/ton or higher.

However, the expected price of buyers has been around 9,000-10,000 yuan/ton.

The listing price of bright oil from PetroChina's Karamay refinery rose to around 15,300 yuan/ton.

Prices are not very attractive, and supply is scarce.

Some buyers and distributors have reduced their inventory levels considerably, even as they have cut back on the amount of goods they use.

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Some companies had hoped supplies would improve after overhauls were completed in Southeast Asia.

Northeast Asia base oil prices remained mostly stable.

China's domestic prices have halted their recent decline.

Domestic distributors mostly keep the prices of their imports steady.

It is observed that some domestic producers have suspended price cuts.

Some manufacturers are even raising prices.

Even so, the price is still a big discount to imports.

Prices of imported low-viscosity oils have come under pressure from domestic producers.

There is a big discount for the home-made goods compared with the imported goods.

Ample domestic supplies add to price pressure.

High viscosity oils still do not experience this price pressure.

Instead, prices have been supported by tight supplies and high restocking costs.

Data showed that high viscosity oil prices had risen to a three-month high in the first half of March, and prices have since paused to maintain buoyant levels.

Buyers are resisting the higher prices and are seeking to reduce the use of these goods.

But prices remain firm.

Many end users also strongly resist any move to increase the price of lubricants.

Some oil adjusters have responded to higher prices by delaying restocking of many imported base oil cargo.

They expect those prices to moderate as seasonal demand slows.

The phenomenon usually begins at the end of May.

Supply is also likely to improve in the coming weeks as overhaul of many factories in China and the Asia-Pacific region is completed.






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