Kline's February Base Stock Margin Shows Significant Drop in Conventional Base Stock Profitability

PARSIPPANY, N.J., Feb. 14, 2014 /PRNewswire/ -- To kick off the new year, Kline & Company, a worldwide consulting and research firm serving 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.

"The Index was adversely affected in January by the run on distillates in the second half of the month," said Ian Moncrieff, who manages Kline's price forecasting activities. "We saw, for the first time, Gulf Coast prompt low sulfur VGO trading at above ULSD values, while FCC-derived light cycle oils were on par with heating oil. While distillate:VGO premiums have been narrowing structurally, we see last month's events as unsustainable, which should result in some near term recovery in conventional Group II base oil margins." Moncrieff continues, "To add to the uniqueness of January's events, the Index's re-refining cash margin exceeded that of conventional VGO-based plants for the first time. Finally, the Group II posted prices dropped by $0.15/gallon for light/medium neutrals, and a little more for 600N, reflecting the continuing weakness in the cash markets for base oils."

To learn more about Kline's Base Stocks Margin Index, please visit our Knowledge Hub, or contact Geeta Agashe, Senior Vice President ([email protected]) at (973)-435-3484, or Ian Moncrieff, Director ([email protected]) 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.

Kline Management Consulting provides the optimal size, superior team demographics and team-oriented culture that make engagements a success for our clients. Unmatched in our ability to gather high-value, hard-to-get market and competitive intelligence Kline delivers syndicated and custom research solutions to support strategic planning for today's global and local business environment.

Building on our 50-plus years in the business and leveraging our worldwide network of offices in the Americas, Europe, Asia and the Middle East, our teams draw upon pragmatic industrial and commercial experience to profoundly understand and interpret global impacts and local perspectives and have the local knowledge and language skills to aid your business decision-making and strategies. For more information, visit www.KlineGroup.com.

For more information, please contact:

Eva-Maria Harthaus
Marketing Communications
(973) 435-3392
[email protected]

SOURCE Kline & Company

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