For the Quarter Ending June 2024
North America
In Q2 2024, Gear Oil pricing in North America exhibited a strong upward trend throughout the quarter. The primary driver of this increase was the consistent rise in upstream Crude Oil prices, which affected the cost of Base Oil, a key feedstock for Gear Oil. Additionally, geopolitical tensions and resulting supply chain disruptions further raised production costs. Refiners prioritized Base Oil production in response to competitive pressures from other fuels, reducing the feedstock availability for Gear Oil production.
In the beginning of the quarter, refiners such as Safety Kleen and Avista Oil announced new markups in the paraffinic market. Meanwhile, Ergon, Process Oil, and San Joaquin Refining implemented price hikes in the naphthenic market. Major players like ExxonMobil, HollyFrontier, Calumet, and Motiva also raised prices to maintain profit margins, contributing to a bullish market trend.
Seasonal factors also played a crucial role, with market participants increasing procurement and stockpiling activities ahead of the hurricane season to mitigate potential supply chain delays. This proactive approach reflected strong anticipated demand for the upcoming quarter and further reinforced the upward price movement.
APAC
In Q2 2024, the gear oil market in the APAC region experienced a significant price increase driven by several key factors. Strong demand from the machinery, automotive, and aftermarket sectors was the primary driver of this trend. Increased consumption was further exacerbated by supply constraints and dwindling inventories. Additionally, rising base oil prices contributed to the overall surge. Market participants engaged in proactive stockpiling to address potential supply chain disruptions and logistical challenges, widening the demand-supply gap. Despite these conditions, there were no major plant shutdowns or severe disruptions that worsened the situation. Singapore saw the most notable price changes in the region. The gear oil market there demonstrated a strong upward trend, driven by seasonal demand and strategic inventory buildup in anticipation of the monsoon season. This proactive approach led to significant price increases as the market anticipated potential supply chain challenges. Prices continued to rise throughout the quarter, with a steady increase observed between the first and second halves of the period. This sustained upward movement reflects a positive market outlook driven by robust demand and strategic market behaviors.
Europe
In Q2 2024, Gear Oil prices in Europe experienced a significant shift from a bearish to a bullish trend. While the overall price trajectory was upward, several stabilizing factors were noted, including increased imports and enhanced local production. At the beginning of the quarter, production was subdued due to the Easter holidays, and many businesses also closed for the Ramadan festival. It resulted in a substantial drop in trading activity and sustained bearish market sentiment. By mid-quarter, however, prices in Germany began to rise, driven by increased operating costs and supply shortages. Seasonal factors, such as the summer driving season, further elevated demand for lubricants, contributing to higher prices by the quarter's end. Compared to the previous quarter, prices initially declined but increased during the latter half of Q2. This rise was driven by higher feedstock costs and disruptions in production and supply chains. Additionally, rising logistics costs and seasonal demand spikes further contributed to the price increase despite some stabilizing factors.
For the Quarter Ending March 2024
North America
In the first quarter of the US market, Gear Oil prices experienced an upward trend, mirroring the increases seen in both its feedstock, Base Oil, and its upstream source, Crude Oil. This price trend was supported by a moderate supply and strong demand for Gear Oil, driven by improvements in the downstream automotive and industrial sectors.
The automotive industry, a major consumer of Gear Oil, showed signs of recovery and growth, leading to increased demand for lubricants. Similarly, the industrial sector, which relies heavily on machinery and equipment that require Gear Oil for lubrication, also contributed to the strong demand.
The increasing pattern of Base Oil and Crude Oil prices further pushed up the cost of producing Gear Oil, adding to the upward pressure on prices. However, despite the rising prices, the market dynamics remained balanced, with supply able to meet the strong demand. This overall positive environment in the US market for Gear Oil in Q1 reflects a robust performance in the automotive and industrial sectors, suggesting a healthy outlook for the rest of the year.
APAC
In the first quarter of the year, the Asia-Pacific (APAC) region, particularly India, witnessed an increase in the prices of Gear Oil. This price trend was in line with the rising pattern of its feedstock, Base Oil, and its upstream component, Crude Oil. The supply of Gear Oil remained moderate, while demand was strong, driven by improvements in the downstream automotive and industrial sectors in India. The automotive sector, a key consumer of Gear Oil, showed signs of recovery and growth, contributing to the increased demand for this lubricant. Similarly, the industrial sector, which relies on Gear Oil for various machinery and equipment, also experienced improvements, further boosting demand. The strong demand for Gear Oil, coupled with the increasing prices of its feedstock and upstream components, led to the overall increase in Gear Oil prices in the APAC region, particularly in India. This trend underscores the importance of monitoring feedstock prices, supply dynamics, and downstream sector performance in understanding the price movements of lubricants like Gear Oil in key markets.
Europe
In the first quarter of the German market, Gear Oil prices followed an upward trajectory, aligning with the increasing patterns observed in its feedstock, Base Oil, and its upstream source, Crude Oil. Despite this, the supply of Gear Oil remained at an average level, while demand was moderate. The automotive sector, a key consumer of Gear Oil, showed signs of improvement in Q1, driving some demand for lubricants. However, the overall demand remained moderate, limiting the upward pressure on prices. The increasing prices of Base Oil and Crude Oil contributed to the rising production costs of Gear Oil, further impacting its price trend. Despite the challenges, the market maintained a balanced supply-demand dynamic, with supply meeting moderate demand. The improved performance of the downstream automotive sector in Germany provided some support to the market, indicating a positive trend for Gear Oil in the region. Overall, while the market saw price increases, the moderate demand and average supply levels in Germany's Gear Oil market suggest a stable outlook for the near future.