Kline’s April Index of Base Stock Production and Re-refining Cash Margins Reflects Relatively Profitable Conditions for Refiners

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Kline's April Index is a part of a monthly Base Stock Margin Index introduced by Kline in January 2014; detailing trends in base stock production.

Kline April 2015 Base Stock Margin Index

Kline April 2015 Base Stock Margin Index

In January 2014, Kline & Company, a worldwide consulting and research firm serving the needs of organizations in the lubricants and base stocks industry, introduced its monthly Base Stock Margin Index, a characterization of recent cash margin contributions in the U.S. base oil market over the past 24 months.

The Index estimates cash margin contributions associated with U.S. Group II base stock production. It simulates EBITDA before the deduction of corporate SG&A expenses for typical VGO-based virgin base stock plants and RFO-based re-refineries. A more detailed description of the Margin Index can be found in the January 2014 release.

Click here to view the April 2015 Base Stock Margin Index

“It appears that, after nine months of market turbulence, crude oil markets have begun to find a temporary ‘new norm’ at around 50% of pre-collapse levels,” noted Ian Moncrieff, Vice President of Kline’s Energy Practice. “To some extent this collapse has benefitted base oil producers who, despite the adverse supply/demand fundamentals of continuing overcapacity and weak demand, have managed to improve profitability by delaying price adjustments in the face of falling feedstock values. If markets are now truly adjusted to this new, lower level of price fundamentals it will be very interesting to see if base oil producers can hang on to current production margins in the face of intense competition.”

Click here to view the Unlagged vs. Lagged Cash Margins Chart

For more information on the Kline Index, or to inquire about our pricing and margin analysis services to the base stocks industry, please contact Ian Moncrieff, Vice President (Ian.Moncrieff(at)klinegroup(dot)com) at (973) 615-3680 in Kline’s Energy Practice.

About Kline & Company
Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the agrochemicals, chemicals, materials, energy, life sciences, and consumer products industries for over 50 years. For more information, visit http://www.KlineGroup.com.

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For more information contact:
Eric Pimenta
Marketing Communications
(973) 435-3435
Eric.Pimenta(at)klinegroup(dot)com

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Vera Sandarova
@Klinegroup
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