In January, 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. A more detailed description of the Margin Index can be found in the January 2014 release.

“During October, light, medium, and even heavy Group I and II grades saw cuts in U.S. posted prices,” noted Ian Moncrieff, Vice President of Kline’s Energy Practice. “These downward adjustments were approximately 5% for low viscosity grades, 4% for medium viscosity grades, and 3% for high viscosity grades. Overall cuts in Group I and II postings were in the 7-10 cents/gallon range. In addition, TVAs were reported higher, as the industry enters the end of year destocking season. The net result was a decline in weighted average sales realizations of around $5/Bbl. This decline in top line unit base sales prices was only partially offset by a drop in U.S. Gulf Coast LSVGO prices (of some $1.50/Bbl). As a result, cash margins for both conventional base oil producers and re-refiners fell during October. Given the traditional end-year weakness in base oil markets, prospects for a short term rebound in cash margins are limited. Producers need to balance the desire to maintain market share against the prospect of losses on marginal production, most notably in export markets and for low-viscosity materials.”

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@klinegroup.com) at (973)-615-3680 in Kline’s Energy Consulting Practice.

PARSIPPANY, NJ, NOVEMBER 2, 2015 – The U.S. crop protection chemical industry experienced a 3.5% decrease among distributors at the cost of goods sold (COGS) level during 2015, according to the recently published report Leading Distributors in the U.S. Crop Protection Industry: A Strategic Market Analysis by global management consulting and market research firm Kline. The report tracks the leading 20 distributors, which account for over 95% of the total sales of crop protection chemicals within the United States. Total 2015 COGS at the distributor level are over USD 10 billion.

The 2015 crop protection industry began with challenging market conditions due to lower commodity prices and tight farmer economics, ultimately resulting in lower corn planted acres and affecting crop protection sales for most manufacturers of crop protection products. High inventories rolled over from the 2014 season forced distributors to provide incentives to growers.

Notable acquisitions during the year include: Land O’Lakes (Winfield) and United Suppliers announce merger of their crop input businesses, Wilbur-Ellis acquires Lacey’s Farmacy, Triangle Chemical acquires Cardinal Chemicals and Pinnacle acquires three agricultural retailers. According to Joe Prochaska, Project Manager in Kline’s Agriculture/Specialty Pesticides practice, “Consolidation continued during the year as the distribution channel looked for ways to grow their business during a down market. With consolidation there is a need for improved efficiency, and as a result, managers must identify inefficiencies within the combined business and take actions to drive out the additional costs of the new entity.”

The report indicates the U.S. crop protection industry as mature yet dynamic on a year-to-year basis with plenty of business opportunities for companies within the distribution channel willing to take educated risks. Market drivers identified within the agricultural distribution channel include: improving efficiencies, managing new regulations, customer relationships, and adopting new streams of revenue.

As part of our continuing efforts to provide clients with clear indication of the performance of the U.S. crop protection industry, Kline is offering the Crop Protection In-Season Market Update: U.S. Market Analysis. This report delivers updates through the first three quarters of the 2015 calendar year and provides clients with an up-to-date market analysis of the performance of eight of the leading manufacturers that represent almost 80% of the industry total. The report provides percent changes from the previous year on each of the five chemistry segments of the crop protection industry by company and major crop.

Information is obtained through a variety of means including a thorough analysis of quarterly reports and discussions with key industry people. At the request of clients, sales performance is recorded at the “ground level,” indicating the activity taking place within the distribution channel. In addition, we provide estimates of year-end supplier crop protection sales and total size of the market. This thirty-page report will prove to be useful for marketing, sales, and strategic planning for the 2016 year.

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 www.KlineGroup.com.

PARSIPPANY, NJ – October 26, 2015 – Southeast Asia is the fastest growing pharmaceutical market in the world, witnessing double-digit growth since 2011, with growth of excipients consumption in the region also strong and estimated to increase at a compound annual growth rate of 13.4% through 2020, finds recently published Specialty Excipients for Oral Solid-Dosage-Form Pharmaceuticals: Emerging Markets Analysis and Opportunities by global market research and management consulting firm Kline. Another excipients market analyzed in the report with solid pockets of opportunity is the Middle East and Africa region, forecast to progress at a CAGR of nearly 8% through 2020.

Despite having small shares in the global market, the Middle East and Africa and Southeast Asia account for roughly 5% and 4%, respectively, of the global specialty excipients market. Growing population, increasing government healthcare expenditure, developing health insurance industry, and the increase in the prevalence of chronic disease, among others, are vital contributors to the pharmaceutical industry’s growth in these regions.

However, these markets are heavily dependent on imports for pharmaceutical raw materials with minimum-to-no domestic manufacturing. The top five suppliers in these regions are DFE Pharma, Roquette, Meggle, JRS Pharma, and MingTai, together holding over 50% share in sales by volume. European suppliers have relatively greater influence in the Middle East, while Indian and Chinese suppliers have a relatively greater share in the Southeast Asian market.

“Southeast Asia is the fastest growing pharmaceutical market in the world and attracts the interest of many global pharmaceutical companies,” comments Nikola Matic, Industry Manager, Chemicals & Materials. “Although the pharmaceutical industry regulations in Southeast Asia are not as stringent, the countries within this region are heading towards higher regulatory standards and synchronization of regulations, aiming to reduce regulatory complexities for manufacturers. This creates a favorable environment for the market entry for excipients suppliers.”

With over 40% of total consumption by volume and value in Southeast Asia, Indonesia is by far the largest consumer of binders and fillers, followed by Thailand and Vietnam. In the Middle East and Africa region, the Middle East accounts for over 60% share of the total consumption volume in the region and Turkey, Israel, and Egypt are the three leading countries in terms of consumption of excipients.

Following the global trend, the fastest growing category in these regions is coatings. However, the share of ready-to-use formulated coatings in these regions is much higher than the film-formers for in-house coatings compared to the other regions. Among the key reasons for this preference is the ease of use and less developed formulation research and development technologies and expertise.

Oral solid doses are the prominent drug delivery route in the pharmaceutical industry, in which, the role of several excipients is continuously growing to contribute added functionalities to the drug formulations. Growth in the local manufacturing of OSDFs is expected to drive the market of excipients in Southeast Asia and the Middle East and Africa; as a result, these regions can represent large growth areas for excipients suppliers.

Specialty Excipients for Oral Solid-Dosage-Form Pharmaceuticals: Emerging Markets Analysis and Opportunities allows users to view data by supplier, excipient category, and excipient through its interactive database and the written reports provide subscribers with enlightening explanations on the database figures, forecasts models, and market drivers.

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 www.KlineGroup.com.

PARSIPPANY, NJ – October 22, 2015 - GlamGlow, NYX, Le Labo, Ren, and Dermalogica are among several of the hottest formerly indie brands sold in the intense string of beauty acquisitions over the past two years. Coupled with problem-oriented, niche, and innovative products to reach specific demographics, such as millenials, Generaration Z, baby boomers, and multi-cultural groups, the independent beauty brands experiencing growth of nearly 19% in 2014 are the acquisition candidates explored in Kline’s recently published report Beauty’s Most Buyable Brands: Analysis of Booming Independent Brands in the United States. With the assessment of approximately 100 privately-owned beauty brands and the subsequent selection of top gems, the study goes beyond regular analysis and points to which are the most buyable ones.

While the overall cosmetics market grew at a compound annual growth rate of over 3% between 2009 and 2014, independent brands as a whole experienced double-digit growth of nearly five times the market average during the same period. In 2014, 20 independent brands post double- or triple-digit growth. Among the 10 fastest growing is a blend of brands targeting various niche needs from eyebrow care to skin care remedies to natural oral care products.

brands often referred to as indies, drive acquisition activity in the industry. While they are a driving force for larger companies and PE firms, being acquired also serves as a catalyst for their own growth as it opens new doors, creates a greater investment in research and development, and helps bring these products to a larger number of consumers.

“Independent companies interact more closely and frequently with their consumers, allowing these companies to respond and innovate quickly to reflect the changing needs and tastes of consumers,” comments Karen Doskow, Director at Kline’s Consumer Products practice. “For example, CEO Craig Dubitsky of Hello Products, an oral care company experiencing triple-digit growth in 2014, answers all consumer e-mails and even provides consumers the chance to Skype with him on the company’s website. This shows a major difference between how a major company and an indie company have the capability to interact with consumers.”

The rise of social media marketing, available at a nominal investment, also gives rise to these brands that, in turn, are able to compete with the marketing budgets of the leading players. Independent brands effectively captivate their audiences through YouTube videos, Instagram pictures, and blog articles that have given way to new forms of advertising. User-generated reviews are an important resource women turn to prior to purchasing makeup, and beauty bloggers can easily influence the purchasing decision of a consumer. Smart brands utilize these activities to influence consumers’ purchasing decisions.

NYX, e.l.f., Anastasia Beverly Hills, and Too Faced are among the top ranked beauty brands across social media platforms. At the end of 2014, Anastasia Beverly Hills was the top performing brand on Instagram. The brand also saw the highest Engagement and Impact scores, demonstrating that its mix of offerings from professional visuals to user-generated content is propelling Anastasia Beverly Hills to the top.

Younique, a natural skin and hair care company, puts a “younique” social spin even on the way they sell products by empowering its Sales Presenters to advertize products almost exclusively through social media by holding virtual parties with consumers on social media platforms. “In this day and age, where social media has become an integral part of consumers’ lives, this approach adds a modern spin to direct selling, a retail model struggling in the current environment,” comments Kelly Alexandre, the analyst of the research.

Kline’s Beauty’s Most Buyable Brands: Analysis of Booming Independent Brands in the United States report analyzes the dynamics of independent brands and their success factors, discusses mergers and acquisitions, profiles the fastest-growing indies, and provides a five-year outlook on the market.

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 www.KlineGroup.com.

In January, 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. A more detailed description of the Margin Index can be found in the January 2014 release.

“The decline in Group II 100N and 200N postings, which occurred at the beginning of August, was followed by a second round of downward adjustments during the second week of September,” noted Ian Moncrieff, Vice President of Kline’s Energy Practice. “The viscosity-weighted drop in U.S. Group II prices from August to September amounted to $3/Bbl. Combined with a modest uptick in VGO pricing, the net result was a drop in conventional Group II cash margins of some $4/Bbl. Turning to base oil domestic demand, the EIA reports that U.S. ‘lubricant’ consumption in July, 2015 was nearly 15% above the same month in 2014, continuing the growth trend discussed in last month’s release. Even though U.S. base oil consumption in 2015 appears to be growing, other major economies are not following the U.S. market’s lead, with static or declining indicators in the other major markets.”

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@klinegroup.com) at (973)-615-3680 in Kline’s Energy Consulting Practice.

PARSIPPANY, NJ – October 8, 2015 - China, Europe, and the United States are three of the world’s leading markets for professional skin care products. While Europe surprised everyone with the strongest growth it had experienced in the past six years, China managed to maintain growth and the status of the largest of these markets despite the current economic slowdown and challenging political conditions, registering growth across all distribution channels in 2014, finds the recently completed Professional Skin Care Global Series: Market Analysis and Opportunities report from international market research and management consulting firm Kline.

The three culturally-distinct regions highlight that social, ethnic, and environmental factors play an undeniable role in shaping consumer preferences and behavior in the market, and therefore each market is unique, offering distinct growth pockets.

The ethnic and cultural influences in China are most evident in the order of skin care concerns that drive the professional skin care market. The youthful appearance and resilience of Asian skin to the signs of aging, particularly wrinkles, is well known, and while skin aging is the leading concern globally, it ranks only third in China. The Chinese culture highly regards the complexion and clarity of skin, concerned more over dryness and skin-whitening.

In contrast with the product-driven markets of the United States and Europe, where retail take-home sales are nearly triple the size of professional-use product sales, in China, back-bar sales at spas, salons, beauty institutes, and physicians’ offices have a sweeping lead over take-home sales, shedding light on the service-led nature of this market.

China offers a dynamic playground for local brands, such as Amitabha, Chlitina, and Jourdeness, as well as international players, such as SkinCeuticals, Decléor, and NeoStrata. International brands, although accounting only for a little over one-tenth of the Chinese market, continue to thrive, growing at a healthy rate of over 8% and outpacing the market which posts growth of under 5% in 2014. Some smaller local brands struggle due to the strain of the scrutiny posed by the nationwide anti-corruption campaign, affecting several categories of luxury goods, including professional skin care products.

Like China, the European market is also fragmented, with a large number of players across the region, and no single brand with a convincing lead. In 2014, the top five leading brands account for just a little over one-fourth of the total sales in the region. However, the European professional skin care market, fortified by increased consumer spending, registers the highest sales increase in 2015 in the last six years. With the exception of Italy and Russia, all countries register solid growth. The United Kingdom shows the fastest growth of all countries at almost 8%.

While in China, skin-whitening products are the most popular, the opposite is true for Europe, where tinted moisturizers gain popularity in 2014, with several new offerings from leading marketers, such as the UV Daily Broad Spectrum SPF 40 by EltaMD and Bronz’Express Tinted Lotion by Académie Scientifique de Beauté. At the same time, demand for sun protection products continues to increase, not only in the light skin-seeking Chinese market, but also in the tan-loving European and U.S. markets. The increasing awareness about the harmfulness of sun exposure is helping sales of professional sun care marketers like EltaMD soar through 2014 and 2015.

The outlook for the professional skin care market is optimistic at a compound annual growth rate of close to 5% by 2019. Markets and consumers are rapidly evolving, with the focus shifting from lower costs to value for money, attention expanding from just the face to the overall body, and growing interest in hybrid products that blur the lines between skin care and makeup. More and more spas and offices are using beauty devices to supplement their back-bar services, more physicians are dispensing, and sales through the Internet are unstoppable.

About Kline
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 www.KlineGroup.com.

In January, 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. A more detailed description of the Margin Index can be found in the January release.

“While discounted U.S. postings for light and medium grades of Group II dropped by $0.10/gallon in August, there was a greater drop in Brent crude oil and U.S. VGO prices ($0.24 and $0.27/gallon, respectively), allowing both types of base oil refiners to improve gross margins over the past month. In terms of instantaneous profitability, the market is back near the high water-marks seen over the past two years, though well below standard costs necessary to support reinvestment. The underlying fundamentals are still not strong, and the embedded time lag between changes in feedstock and base oil price movements did not catch up with events until early September, when there was a round of posted price reductions in the light/medium grades announced by producers, ranging from $0.10-$0.15/gallon,” noted Ian Moncrieff, Vice President of Kline’s Energy Practice.

“In terms of recent changes in global base oil and finished lubricant demand, there is apparent strengthening in U.S. production of base oils, according to EIA data on U.S. ‘lubricant’ consumption (actually base oils). For January through June 2015, the EIA reports a 13% increase in U.S. ‘lubricant’ consumption over the first half of 2014. In addition, net U.S. exports of ‘lubricants’ have risen by 10% over the same period. This recent uptick in U.S. production has not been mirrored in consumption and imports of major lube-consuming countries where short term market movements are measurable. Chinese ‘lubricant’ imports are down by more than 100 kilotonnes for the first half of 2015 vs. the same period in 2014, while Indian imports are down also. Major markets other than the United States appear to be flat or somewhat down on 2014 consumption levels.”

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@klinegroup.com) at (973)-615-3680 in Kline’s Energy Consulting Practice.

PARSIPPANY, NJ – September 8, 2015 - Europe and CIS together account for a total 23% of the global synthetic latex polymers market in 2014. While consumption of synthetic latex polymers in CIS remains low, the region offers high growth potential. Import substitution programs implemented by the Russian government along with the strategic development of chemical industry plans across the majority of CIS countries will drive the synthetic latex market in the region, estimated to increase at 2.6% through 2019, finds the recently published analysis of the CIS and European regions from Kline’s Synthetic Latex Polymers: Global Business Analysis and Opportunities report. However, the political and economical instability in the region could decelerate this growth.

The consumption of different lattices varies widely between the two regions, notably due to the contrasting application split. While CIS region styrene acrylics lead by a large amount, followed by polyvinyl acetate, in Europe, carboxylated styrene-butadiene (X-SB) remains the leading synthetic latex polymer in volume terms, and styrene acrylics represent the largest chemistry in terms of value. The product split differs even from one country to another and from one application to another.

Due to environmental and market conditions increasingly pressing for the petrochemical industry, VAE is benefiting from its favorable application mix, competitive pricing, and environmental-friendly profile, expected to be the fastest growing polymer between 2014 and 2019. VAE’s relative low cost is due to the favorable situation in the ethylene market, mainly as a result of the increased extraction of shale gas. The strengthening of VOC regulations in Europe has also bolstered VAE’s growth.

Due to the market’s maturity and large number of active players, rivalry is high on the European synthetic latex polymers market. With the increasing consolidation, the competition is also increasing on the CIS market, which was extremely dynamic in terms of the supplier landscape development over the last four years. Among the changes were an entrance of new, mainly local suppliers, including Novojiazot, Akrilat-Kz, and SWAN, among others, and an increase in production capacities by prominent local suppliers, such as Akrilan and Homa Group.

BASF and Dow Chemical are the two largely present suppliers in both regions where the supplier landscape is fragmented, albeit for the top six suppliers in Europe accounting for two-thirds of the total European market. The variety of products and applications are a key factor explaining this market fragmentation.

As paper production in Europe is decreasing due to the switch to electronic media, paper is no longer the leading application in terms of SLP consumption. Paint and coating applications are currently the leading consumers of synthetic latex polymers in Europe by both volume and value. In CIS, paints and coatings has been by far the most dominant end-use application in 2014, accounting for over 34% of the total consumption. Other important smaller applications are glass fiber and nonwovens.

Different variables will be influencing the growth of leading synthetic latex polymers in Europe and CIS. The European market is mature, and its growth will be affected by the poor performance of some of the large consuming applications. “Although affected by the decline in paper applications in terms of emulsion polymers consumption, overall figures are hiding the growth potential that exists in a wide range of other applications in Europe, driven by favorable macroeconomics in the region,” comments Nikola Matic, Industry Manager at Kline’s Chemicals & Materials Practice. Growth in CIS is favorably affected by various economical measures taken by local governments.

Take a more detailed look at the synthetic latex polymers market in CIS and Europe. REGISTER FOR A FREE WEBINAR, taking place on Wednesday, September 9, or REQUEST our factsheet. Covering the complex market of synthetic latex polymers since the 1970s, Kline just published three new regional analyses—Brazil, CIS, and Europe—from its continuous synthetic latex polymers program.

About Kline & Company
Kline is an international firm that 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 55 years. For more information, visit www.KlineGroup.com.

PARSIPPANY, NJ – September 2, 2015 - Europe is the third largest finished lubricants region, consuming approximately 17% of the global demand. The top five lubricant markets in Europe account for nearly two-thirds of the region’s demand. Russia, Germany, and the United Kingdom make up about 50% of the market.

While other European markets remain flat, the United Kingdom, the third largest consumer of finished lubricants in Europe, is on the upswing due to a variety of factors, according to the recently published Global Lubricants: Market Analysis and Assessment report from global market research and management consulting firm, Kline.

The consumer automotive lubricants market in the United Kingdom is stable, forecast to increase at a compound annual growth rate of 1% to 2019. Demand for PCMO in the United Kingdom accounts for approximately 84% of the consumer automotive segment. Following the global trend, the United Kingdom is witnessing a migration to lower viscosity grade PCMO resulting in higher penetration of synthetics and semi-synthetics. Original equipment manufacturer (OEM) recommendations play an important role in driving this shift.

Sales of synthetic 0WXX grades are expected to increase in an otherwise flat passenger car motor oil (PCMO) market, as OEMs shift their factory fill requirements to lower viscosity grades in order to improve fuel economy. Due to the increased presence of Asian OEMs in the United Kingdom and their tendency to recommend 0W for service fill, as well as European OEMs’ recommendations of 5W grades, the growth for these viscosity grades is forecast to accelerate.

Two viscosity grades, SAE 10W-40 and 5W-30, account for a combined 84% of the total demand for PCMO in the United Kingdom. Demand for 10W-40 has been on the decline. Conversely, fuel economy grades started to become the leading viscosity grade in the market, in particular the 5W-30 grade.

According to Sharbel Luzuriaga, Project Lead in Kline’s Energy Practice, “The good shape of the economy and enhanced consumer confidence encourage people to purchase new vehicles. On average, two million new units are projected to be registered in the United Kingdom through 2015, and 2016 is paving the way for increased use of low-viscosity, fuel economy grades, developed to meet more stringent emission norms. The use of synthetic grades will lead to longer drain intervals and lower volumetric growth.”

Finished lubricants are marketed in the United Kingdom through two distribution channels: installed and retail. The increased prevalence in the installer establishments will negatively impact the retail lubricants sector.

Do-it-for-me (DIFM) consumers represent the majority of the population. Franchised car dealers conduct an estimated 25% of overall installed sales in 2014 compared to 50% in 2010. Within the installed segment, franchised car dealers have been eroded by the proliferation of independent workshops and the increasing tendency for DIFM consumers to have their oil changes performed by independent workshops.

“The recovery of the economy in the European Union has been steady in recent years. Expanding at a strong 3.2% in 2014, the United Kingdom is exhibiting robust growth. Lubricant demand generally trails GDP growth; therefore, it can be anticipated that demand for consumer lubricants will grow at a slightly slower pace than the performance of the overall economy,” adds Luzuriaga.

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, www.KlineGroup.com.

In January, 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.

“The modest strengthening which occurred in crude oil prices in May and June was reversed in July, with Brent dropping from around $60/Bbl at the beginning of the month to the low $50s by month-end. VGO cracks over crude also declined modestly in July, allowing base oil margins to increase over the previous month,” noted Ian Moncrieff, Vice President of Kline’s Energy Practice. “The improvement in July instantaneous cash margins was due entirely to lower cost feedstocks. Although Motiva kept its Group II postings constant for the month of July, modest downward adjustments were made during the first week of August. Motiva’s sensitivity in adjusting postings to reflect changes in market and cost/price fundamentals is markedly different from other U.S. Group II producers. Only one other Group II producer has changed its Group II postings during 2015 (being Chevron on March 11). Phillips66 and Flint Hills Resources last made changes to their 100N through 600N grades in mid-December of 2014.”

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@klinegroup.com) at (973)-615-3680 in Kline’s Energy Consulting Practice.