Nigeria’s lubricant distributors and blenders’ profit margins fell in the second quarter of the year in the face of surging costs.TotalEnergies Marketing Nigeria’s (TNM) profit margin fell the least and remained well above other lube distributors and blenders..The pressure on local blenders’ profit margins reflected the exposure they faced to costs that were hard to control.Nigerian blenders’ reliance on base oil imports to supply their blending plants increases their exposure to changes in supply dynamics in key sources like Europe and Russia.Those supply dynamics changed abruptly during the first half of the year. The trend triggered unexpectedly tight base oils supply and a surge in prices.Freight costs, logistical delays and currency volatility added to the pressure on costs.A relative outlier was TNM, whose lube strategy in Nigeria is different from some other major global blenders.It operates several lube blending plants in Nigeria and distributes lubricants via its more than 570 service stations throughout the country..TotalEnergies' Nigeria Q2 lube profit up.Other global blenders distribute their lubricants through local distributors.Local oil products distributor and lube producer Ardova is the sole distributor of Shell lubricants in Nigeria for the automotive and industrial sectors..Nigeria Ardova's lube unit sees Q2 loss.Eterna Plc manufactures and distributes Castrol’s lubricants in Nigeria. Its lube unit’s sales fell in the second quarter from year-earlier levels for the first time in six quarters.TNM’s lubricants sales are much larger than other local oil product and lube distributors.The larger revenue suggests larger sales volumes and the subsequent requirement for larger base oil feedstock supplies.The requirement for larger volumes increases the importance of stable supplies and the attraction of term shipments and of hedging other variables such as currency risk.Term prices for base oils also tend to be lower than spot prices for base oils when market prices are rising..Nigeria Conoil’s Q2 lube profit falls
