Lubmarine outlines current marine lubes crisis

TOTAL Lubmarine has outlined its position concerning increasing raw material costs and growing shortages of marine lubricants.

Andrew Knox, Head of Marketing at TOTAL Lubmarine, says, “Recent events, even before Hurricane Katrina, and the force majeure declarations made by many suppliers after the hurricanes, have shown how tight the worldwide situation is. This is due to a long historical period of low and decreasing margins which have discouraged the industry from investing.

“With the 2004 and 2005 increases in crude oil and lubricant raw material market prices, industry profitability has become worse still, and the incredible acceleration in cost increases in recent months puts the industry in an unprecedented position of vulnerability. Since July, base oil price costs have increased by between 24 and 35 per cent, depending on the product.

“Our current estimate is that we need to increase the end price of marine lubricants by between 20 and 30 per cent before the end of the year, just to compensate for the recent increases. If this is not achieved, the short and medium-term outlook for the supply of marine lubricants looks bleak.”

TOTAL Lubmarine has organised its logistics teams for more than two months now into a permanent “crisis management cell”, monitoring its worldwide supply position on a daily basis. As a result, up to now, Lubmarine has been able to serve all its customers and to supply all contracted vessels. It continues to work closely with engine manufactures during the supply crisis to find lubrication solutions, where appropriate, that will allow shipping companies to continue to burn fuel with a wide range of sulphur content without the risk of increased engine wear.

Andrew Know concludes, “We hope that the whole shipping industry – which continues to develop on a profitable basis – will understand that the long-term sustainable supply of marine lubricants is mainly in their hands.”