Crude oil price falling, lubrication oil rising

VietNamNet Bridge – The lubricants for engines have not seen any price decreases, but have even been increasing, despite the sharp falls of the crude oil prices in the world market. Why?

Many lubricant trading companies said that they cannot slash the sale price of lubricants because they still need to sell the stocks that they previously imported at high prices.

However, the explanation seems to be unconvincing. A General Director of a domestic lubricant trading company, who has 10 years of experience in the field, said that the companies are proving to be unfair in not having slashed the sales prices. He said that while the lubricants for production are seeing decreases in consumption, the lubricants for engines can be sold as soon as they are churned out. The biggest dumps for the companies are just big enough to store lubricants for less than two months of consumption.

The quotations of base oil in the markets of Singapore, Saudi Arabia, Japan and Europe have all showed that the base oil products, from which lubricant is made, like SN150 and SN500, have all been decreasing sharply in price since September.

In September 2008, the price of oil products hovered around $1,300-1,400/ton, but the prices then dropped to nearly $900/ton at the end of November.

According to baseoilreport.com, South Korean base oil N-60/70 products have decreased by $200 in price to $890-910/ton. Meanwhile, J150 and J500 of Singapore have reduced by nearly $300/ton to $885-905/ton.

Experts said that the current prices have represented the ½ price decrease when compared to the period when the crude oil price was at over $140/barrel at the end of July.

Meanwhile, in HCM City, the lubricant sales agents on Tran Huy Lieu and Hoang Van Thu streets in Phu Nhuan district, or the sales agents on Nguyen Trai street in district 1, all said that the lubricant prices have not seen any decreases. They even said that the prices went up by VND 3-4,000/litre in November.

A salesman at a motorbike shop specializing in selling Piaggio model bikes, on Cong Hoa street in Tan Binh district, said that Mobil lubricant for scooters has been offered at VND 245,000/litre, an increase of VND 30,000.

Lubricant market dominated by foreign brand names

It is estimated that there are over 30 companies in the south that import base oil to make lubricant domestically, including big names of the world, like BP, Castrol, Exxon Mobil, Shell, Caltex and Total.

As for the market of lubricant for engines, foreign brand names are now holding 75% of the market share, while they hold 90% of the market of lubricant for equipment and machines in production workshops.

In fact, Vietnam also has its own brand names for lubricants like Petrolimex, Vilube, Solube, S-lube or T-lube. However, they just hold a modest market share, and the sale prices of the products are also modest. While a foreign brand name lubricant tank is selling at over VND 50,000, a domestic brand name tank is priced at VND 35-47,000.

Representative from Shell in Vietnam said that the price of base oil proves to have no direct relation to the crude oil price. The base oil prices have not decreased in accordance with the crude oil price decreases.

However, domestic experts still insist that, in general, the base oil prices always increase or decrease one month after the crude oil price increases and decreases. They affirmed that the retail price of lubricants should have been lowered since November.

(Source: Tien phong)