SCL Encourages Customers to Place Orders at Current Prices
Major oil suppliers have announced a price increase up to 12% on finished lubricants that will hit the market in late February, marking the first national lubricant price increase of 2020. Increases of this type, traditionally announced annually, are typically tied to the economy, rising cost of raw materials and transportation.
At SCL, we understand price increases are not welcomed by our customers, however, we believe it is important to be as transparent as possible. Our goal is to arm our partners with information and tools to help them better understand and respond to fluctuations, both immediately and in the future.
In this case, the price increase – announced by Chevron, Phillips 66, Mobil, Shell, Total and others in the statements below – will affect lubricating oils, gear oil and greases beginning Feb. 24, 2020:
• Chevron Price Communication – 2.24.2020
• Philipps 66 Price Notification Letter – 2.2020
• ExxonMobil Customer Price Increase Letter – 2.24.20
• Shell Announcement – 2.24.20 and Shell U.S. Market Conditions Adjustment – 2.24.20
In response to these announcements, SCL will raise prices accordingly on Feb. 24, 2020.
“SCL recognizes that these changes will impact your business and will make every effort to offset this increase,” said SCL CEO and President Richard Becktel. “We are committed to providing our customers with the highest quality products and outstanding customer service at competitive prices.”
Understanding Price Increases
Oil manufacturers set the pricing for all lubricant distributors like SCL. When costs for raw materials in the form of crude, base oils, additives and even packaging materials increase, oil manufacturers pass those increases onto distributors, who pass them on to customers, who then continue that pattern down the line. This method is known as a cost pass-through, and is a common strategy in many industries.
As far as potential causes, the cost of raw materials can be impacted by a multitude of global happenings – decreases in supply, spikes in demand, natural disasters like hurricanes and earthquakes, political unrest, and basically any other fluctuation in the global economy. Even with only 12% to 13% of our nation’s base oils coming from countries like Saudi Arabia, small fluctuations can have significant impact.
This specific increase, according to information released by Shell, is due to “lower than normal inventories” of base oil. Total also cited “the continued escalation of logistics costs, taxes on import and increase in some raw materials used in the manufacturing and distribution of finished lubricants,” according to a statement by the company.
Taking Advantage of Current Pricing
While SCL has no control over price increases on a global scale, we can and do encourage our customers to take advantage of current prices so they can limit their immediate impact on the pending announcements.
We are bound by historical monthly volume with regard to our orders, which is why our experts encourage customers to place requests as soon as possible.
Additional Tools to Help with Cost Savings
While we cannot dictate the price of finished lubricants, we can help businesses in a wide range of industries make their products go further and their machines run more efficiently. From oil analysis, extending drain intervals, even providing improved fuel economy lubricants, SCL offers a multitude of cost-saving strategies for our customers.
Contact an SCL Consultant today
In a wide range of automotive, industrial and commercial sectors, SCL remains steadfast on its commitment to product and industry knowledge, performance satisfaction and superior logistics. We protect and optimize the machines that keep our country moving. For more information on how we help can help with services including bulk purchasing or managing inventory, contact an SCL expert today.
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