Lubricating oil prices are anticipated to grow gradually due to slower price increases in crude oil and other inputs.
Los Angeles, CA (PRWEB) February 09, 2014
Lubricating oils have a buyer power score of 2.6 out of 5, reflecting a balance between buyers and suppliers. Suppliers provide a myriad of lubricant oils to end-users that include households, manufacturers and government entities. Lubricating oil prices differ depending on the type of base oil and whether the oil is conventional, synthetic blend or synthetic. “Therefore, price is dependent on the type of product and the inputs used,” says IBISWorld business research analyst Lauren Setar. “Crude oil is the largest input and fluctuates widely. Due to these changes, buyers should enter into contracts with suppliers to reduce volatility.” When crude oil prices are high, buyers lose negotiating power as suppliers either pass the price increase on to buyers or absorb the cost themselves, limiting profit margins. Most input prices are volatile and priced in the global marketplace, and thus limit buyer negotiating power; however, certain costs, such as wages, are within the supplier's control and can aid in the buyer negotiation process.
The lack of substitutes for lubricating oil also decreases buyer negotiating power. There are no substitute products available in the marketplace for lubricating oil, so buyers are forced to take the prices offered by suppliers. Buyers can gain negotiating power, though, through the low level of product specialization. This allows buyers to shop around among lubricating oil suppliers to find the best price. “Overall, lubricating oil suppliers have a moderate level of market share concentration and buyers can go to either manufacturers or wholesalers for lubricating oil purchases,” says Setar. Wholesalers offer an advantage over manufacturers because of the many brand offerings, but manufacturers can offer lower prices for products by sacrificing margins. Wholesalers cannot negotiate margins down as much as manufacturers because wholesalers depend on their margin as their main means of maintaining a profit. Consequently, buyers lose negotiating power as margins become slimmer. Major vendors include Chevron Corporation, ExxonMobil Corporation, Phillips 66 Company and Royal Dutch Shell PLC. For more information, visit IBISWorld’s Lubricating Oils procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of lubricating oils. Lubricating oils are used in a number of end products, including industrial oils and fluids (e.g. hydraulic oils, refrigeration oil), consumer automotive products (e.g. passenger vehicle engine oil, gear oil) and commercial automotive products (e.g. heavy-duty engine oil, hydraulic and transmission fluid); automobile lubricants are the biggest market for lubricants. Additionally, lubricating oils and grease, with or without additives, are included. Greases containing over 10.0% of salts derived from fatty acids of animal or vegetable origin, however, are excluded. Chemical manufacturers and petroleum product wholesalers are the major suppliers of lubricating oils.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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