ILMA Compoundings November 2017 - 14
Stability Rattled by
By Judith Taylor
Just as the tight base oil supply conditions that dominated the first half of 2017 were fading and a smattering of
posted price reductions emerged in Group II and II+ base
oil tiers, hurricane season erupted.
Hurricane Harvey battered most of the Texas coast, hitting Port Aransas, Corpus Christi and Houston, along with
other towns and cities in the region. Harvey did damage
and caused flooding in Beaumont and Port Arthur, Texas. In
addition to Texas, the storm raked the Louisiana coastline,
bringing flooding and more damage to Lake Charles.
The late August hurricane drenched the region with trillions of gallons of water, flooding homes and businesses and
displacing thousands of people.
Harvey was a rain event, not a wind event. The heavy rain
pushed rivers over their banks to add more volume to the
swirling waters - the Brazos, Bernardo and San Jacinto rivers overflowed and cut off vehicle movement in many places.
However, by Labor Day on Sept. 4, the area was moving
into recovery mode. Soggy and struggling to cope, ports and
terminals cleared for business more quickly than expected.
Truck business came back fast, and suppliers said customer
requirements were met. Some suppliers said drivers were
difficult to find because so many were needed to work for
FEMA (Federal Emergency Management Agency) during
the difficult days of the hurricane's assault and the search and
rescue actions that followed. Other suppliers said they had no
trouble obtaining sufficient numbers of truck drivers.
Rail came back more slowly, but steadily.
As logistics snarls eased and the situation became clearer, one
issue stood out for the base oil market: supply is tightening and
is expected to remain tight well into the fourth quarter.
Chevron Phillips declared force majeure, or the conditions permitting departure from a contract, on polyalphaolefins (PAOs) effective Aug. 31, confirmed by buyers.
| COMPOUNDINGS | ILMA.ORG
At least one key Group II producer is said to have declared force majeure on its base oils, but at the time of this
writing, no confirmation has come forth from the producer.
The grade most affected at this time is the 200/220 viscosity Group II base stocks.
As the initial recovery moves were occurring in Texas and
Louisiana, Hurricane Irma slammed the Caribbean and
proceeded to flood and flatten Key West, then flood much
of the western side of Florida.
Although there are no oil refineries in Florida, and Irma
did not threaten U.S. oil production in the Gulf, terminals
that receive refined products to satisfy the state's demand
were vulnerable, as were shipping lanes.
Irma loomed as a Category 5 hurricane but was downgraded to Category 4, with maximum sustained winds near
155 miles per hour as it made landfall in Florida on Sept.
10, according to the National Oceanic and Atmospheric
Emergency declarations were made in Georgia, South
Carolina and Florida.
In an attempt to relieve fuel shortages in Florida, the federal government temporarily waived Jones Act requirements.
The Jones Act, also known as the Merchant Marine Act of
1920, requires vessels transporting goods between U.S. ports
to be on U.S.-flagged ships constructed in the U.S., owned
by U.S. citizens and crewed by the same.
Looking at the fuel side, crude oil futures saw a shallow drop but then moved into positive territory, despite
a weekly buildup in U.S. crude inventories during the
second week of September.
The surprise came from the decrease in gasoline stocks,
which turned out to be larger than expected. Data from
the Energy Information Administration (EIA) showed that
crude stockpiles swelled by 5.89m bbl, well above analysts'
expectations for a 3.2m bbl increase for mid-September.
Gasoline stocks, however, decreased - for the second week
in a row - by a sizeable 8.43m bbl, four times above the
2.1m bbl expected by analysts.
The lingering effect of Hurricane Harvey and the consecutive shortfall in the U.S. refining sector prompted a 0.2
percent year-on-year increase in gasoline demand, at about
9.56m bbl over the past four weeks.
Some U.S. Gulf Coast refineries were restarting their
operations early in the week of Sept. 11-15.
Table of Contents for the Digital Edition of ILMA Compoundings November 2017
LETTER FROM THE CEO
WHAT’S COMING UP
In the Know
SHIFTING GEARS – INNOVATING THE FUTURE
NORTH AMERICAN SPECIFICATION UPDATE
DIGITAL MARKETING IN MANUFACTURING
ILMA Compoundings November 2017 - Cover1
ILMA Compoundings November 2017 - Cover2
ILMA Compoundings November 2017 - 1
ILMA Compoundings November 2017 - 2
ILMA Compoundings November 2017 - LETTER FROM THE CEO
ILMA Compoundings November 2017 - INSIDE ILMA
ILMA Compoundings November 2017 - 5
ILMA Compoundings November 2017 - Company Callout
ILMA Compoundings November 2017 - 7
ILMA Compoundings November 2017 - WHAT’S COMING UP
ILMA Compoundings November 2017 - 9
ILMA Compoundings November 2017 - INDUSTRY RUNDOWN
ILMA Compoundings November 2017 - 11
ILMA Compoundings November 2017 - International Insight
ILMA Compoundings November 2017 - 13
ILMA Compoundings November 2017 - Market Report
ILMA Compoundings November 2017 - 15
ILMA Compoundings November 2017 - SHIFTING GEARS – INNOVATING THE FUTURE
ILMA Compoundings November 2017 - 17
ILMA Compoundings November 2017 - 18
ILMA Compoundings November 2017 - 19
ILMA Compoundings November 2017 - 20
ILMA Compoundings November 2017 - 21
ILMA Compoundings November 2017 - 22
ILMA Compoundings November 2017 - 23
ILMA Compoundings November 2017 - NORTH AMERICAN SPECIFICATION UPDATE
ILMA Compoundings November 2017 - 25
ILMA Compoundings November 2017 - 26
ILMA Compoundings November 2017 - 27
ILMA Compoundings November 2017 - DIGITAL MARKETING IN MANUFACTURING
ILMA Compoundings November 2017 - 29
ILMA Compoundings November 2017 - 30
ILMA Compoundings November 2017 - 31
ILMA Compoundings November 2017 - BUSINESS HUB
ILMA Compoundings November 2017 - 33
ILMA Compoundings November 2017 - COUNSEL COMPOUND
ILMA Compoundings November 2017 - WASHINGTON LANDSCAPE
ILMA Compoundings November 2017 - Member Connections
ILMA Compoundings November 2017 - 37
ILMA Compoundings November 2017 - 38
ILMA Compoundings November 2017 - 39
ILMA Compoundings November 2017 - 40
ILMA Compoundings November 2017 - Cover3
ILMA Compoundings November 2017 - Cover4