Graincorp this month officially opened a liquid terminals facility near Sydney, with base oils distributor Hilditch Pty leasing all 10 of the 1,250 cubic meter storage tanks.
The terminal, which cost AU $20 million (U.S. $15.4 million) is located at Port Kembla, just an hour by road from Australias biggest city. It gives the Australian-based trader Hilditch the ability to service its Sydney and New South Wales-state grease and lubricant blender customers with shorter lead times. Hilditchs other Australian storage facility is in Melbourne, in the southern state of Victoria.
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Customers tend to want product quicker, said Hilditch National Sales Manager Thomas Carroll. It just makes sense to distribute and import closer to the customer. The company announced its occupation of the terminal during a March 4 seminar hosted in Sydney by A S Harrison & Co.
In Australia, where haulage by road dominates, it costs as much to move bulk supplies by road tanker from Melbourne to Sydney as it does to ship it from South Korea to Port Kembla, Carroll said.
Five of the tanks at the Graincorp facility contain API Group III base oils from SK Lubricants, which Hilditch has been distributing in Australia for 15 years. Three tanks have been reserved for Group II oils from the new South Korean base oil joint venture between Hyundai Oilbank and Shell, and bright stock from Thailands IRPC.
Carroll said Hilditch is presently working to identify product requirements in the local chemicals industries to ascertain the best use for the last two tanks. For sure, they will be high-flash-point products, Carroll said, as thats Hilditchs mainstay.
Graincorp built the facility specifically for Hilditch using local Port Kembla-made steel to hold high-flash-point stock.
Its possible that the unfilled tanks could be used for more of SKs Group III.
As a base oil it provides the chemistry and the physical properties that lubricant formulators will require for well into the future, said Carroll, citing rising demands on engine oils for fuel economy and compatibility with emissions control technologies.
Carroll said taking up the Port Kembla facility was more about getting supplies closer to their customers than expansion.
Our business model supports local blenders; thats what its all about, Carroll said.
Still, with the shutdown of Australias last base oil plants in recent years, and some international lubricant marketers closing local blending operations, Carroll sees growth opportunities.
History suggests that going to a fully imported business model results in loss of market share, said Carroll. Its an opportunity for the Australian-based blenders – our customer base – to get more market share.