Crude oil prices broke through this week and the lubricant market is still bullish

In early April, due to the combined impact of the OPEC meeting to increase production, the release of strategic oil reserves by the United States, and the prospect of the Fed's interest rate hike, the once-high international oil price fell back to less
than $100.
The latest market on April 11 showed that the settlement price of WTI crude oil futures for May closed down 4.
04% at $94.
29 / barrel; Brent crude oil futures for June closed down 4.
18% at $98.
48 a barrel, giving car owners confidence
in the next round of oil price cuts.
In the lubricant market, however, it's a different story
.
On April 18, the lubricating oil additive giant Lubrizol's 12% price increase policy will officially take effect, which is the end of the collective price increase of this round of lubricants, and has also turned into the last straw
that crushes the optimistic expectations of lubricant distributors.

It is difficult to see an inflection point in lubricant prices in May

"Additives are one of the important indicators to determine the cost of lubricants, and the global supply is basically monopolized by a few European and American brands such as Lubrizol and BASF, and before the price of additives pulls back, it is not optimistic about the future lubricant prices
.
" A senior distributor expressed his views
on the future lubricant market.
In fact, the analysis of lubricant price trends has been a hot topic
in the industry in recent months.
Summarizing the views of all parties, we can roughly sort out the following conclusions:

The situation in Europe continues to be tense, and sanctions against Russia have aggravated the oil supply crisis, which is difficult to reverse in the short term;

The price of raw materials related to the strong lubricant industry chain has increased significantly, and the lubricant brand is unable to fully digest it;

The epidemic in Europe and the United States is raging, consumer demand is weak, upstream refineries are underrun, and base oil supply is not smooth
.
Although the annual import of more than 2 million tons of base oil is only about one-quarter of China's total annual consumption of base oil, most of them are used to blend medium and high-end lubricants of the second and third types of base oil, and the current domestic production capacity cannot be completely replaced
.

"In recent years, international oil prices have been like a roller coaster, with a dozen dollars when it is low, and the most expensive is more than 100 dollars
.
In fact, the lubricating oil has risen by less than 20% in ten years
.
A popular model 4S maintenance price list, in 2016, the preferred engine oil was 288 yuan 4 liters, and now it has risen to 328 yuan, which has risen by more than
10%.
To do lubricating oil, if you simply track the crude oil market, it is to carve the boat for the sword, and compared with other commodities, the lubricating oil has not risen much
.
There is a saying called "rough words are not rough", a senior dealer who did not want to be named, in a slightly ridiculous tone, said some "big truths"
that people in the industry generally agreed.

There is no point in worrying about the price, and how to operate in the future is the key
.

More than 40% of dealers stocked up on spring demand

The fluctuation of lubricant prices has inevitably caused the reshuffle of lubricant production and sales channels
.
There are also differences
of opinion among dealers about the future business route.
An industry survey on the "price increase tide" initiated by an industry portal shows that although a considerable number of dealers believe that the demand is sluggish, the price increase is difficult to change, and they plan to shrink the front, more than 40% of the respondents still said that they "want to actively replenish goods"
.

The reason, first of all, the editor believes that it is directly related to
the "microclimate" in the general environment.
Although the price of lubricants belongs to the general increase in the industry, the channel policies and supply capacity and brand influence of different brands have also caused the actual difference
in sales status.
An agent and distributor who has long-term cooperation with Sinopec Great Wall Lubricants said that the market warning of the brand side is very timely, and everyone was reminded of low replenishment at the beginning of the year, so the overall price of their own inventory products still has a certain advantage
over peers.
"Great Wall Lubricants completed the price adjustment in early March, leaving us more time for operation
.
Like some brands only announced the price increase at the end of March, catching dealers off guard, this wave of market has to step on the air
.
”

Secondly, the spring oil change season is coming, and with the deployment of spring ploughing, the lubricant demand of industry users and drivers and car owners in most parts of the country has increased
significantly.
It is not difficult to find that a number of important cities in the north have resumed and will soon fully resume work and production, and maintenance delays and project stoppages caused by black swan events may trigger a wave of retaliatory lubricant consumption from late April to the end of May
.

Finally, Xiaobian believes that nearly half of dealers are optimistic about the future industry, and there is also a certain causal relationship with
the irreversibility of the trend of consumption upgrades.
Unlike the gains and losses of agents and wholesale channels, the terminal retail channel of lubricants is generally optimistic
.
A person in charge of a chain repair factory sighed: "Now that the car ownership is so large, good lubricating oil is not worried about selling at all, private cars are generally only maintained twice a year, and the owner is not very sensitive to the price of lubricating oil, and generally pays more attention to quality and reputation
.
" Yesterday I met a car owner, after the insurance was released, it was maintained in our store, and it was specified to use the Great Wall Jinjixing JP1 0W-20, and the owner said that his car was a high compression ratio engine of China VI, afraid of carbon deposits and blockage three-way catalysis, and domestic big brands were more assured
.
”

"Now the polarization is quite serious, such as Great Wall lubricants such as big-name domestic products are very popular in the store, now no more than before, consumers are very supportive of domestic boutiques, and everyone feels that there are no fakes
.
" During the peak period of May Day self-driving tours, we also have to find agents to replenish goods
.
However, some small and medium-sized brand products have recently risen sharply, and the price advantage is gone, and some cannot be sold
.
”

In the past, a large number of lubricating oil channel brands only retained the ability to blend lubricating oil, and additives and base oils completely relied on outsourcing, although they maintained the advantage of "asset-light operation" and could fight a price war
.
But in fact, not only the product quality of each batch fluctuates greatly, but also the health of the upper parade and supply chain is directly related to the life and death of the brand, and it is easy to be eliminated at the moment when the huge waves are rolling, causing irreversible impact on
agents and retailers.

In summary, Xiaobian reminds the majority of industry participants to be bearish on the inevitable price increase, and put more energy into optimizing the inventory structure and sorting out brand relationships
.
Targeting international and domestic brands with good reputation, guaranteed quality and solid supply chain like Great Wall Lubricants, I believe that we will be able to complete a key butterfly change
in the lubricant market this spring.