LONDON – Kline & Co. warns the base oil industry to prepare for substantial capacity rationalization and weak margins over the current decade, as demand growth slows and new capacity depresses the market.
At the ICIS World Base Oils & Lubricants Conference here in late February, Milind Phadke, energy practice director for consultancy Kline & Co., shared preliminary 2013 lubricant demand data and painted a dark picture for base oils through 2022. Kline believes that the base stock industry needs to be thinking of a future very different from the past, Phadke said. This future may see repositioning of ownership in base stock players due to inadequate returns over the rest of the decade.
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