Economies around the world may be reopening from lockdowns imposed to prevent the spread of Covid-19, but base oil demand in many places remains sharply depressed and may not recover until late in the year, according to panelists at a webinar last week.
Calumet Specialty Products Partners repaid $31.4 million in federal Paycheck Protection Program loans Monday, two weeks after acknowledging that it could face penalties under shifting government policies for the program.
The economic crises created by the Covid-19 pandemic will probably trigger an overdue consolidation of global base oil capacity, an official from Solomon Associates said during a webinar last week.
Nynas AB announced Tuesday that Petroleos de Venezuela S.A. sold a 35 percent stake in the company and that the United States lifted sanctions against Nynas as a result of the divestment.
Rerefiners in North America are feeling the impacts of the Covid-19 pandemic in the form of reduced demand for their base oil and finished lubes, along with less feedstock. This is due to a dramatic decrease in the number of miles driven, with most people teleworking and traveling less for work, recreation and tourism.
Calumet Specialty Products Partners L.P. reported a net loss, Valvoline posted a slight decrease in operating income, HollyFrontier’s lubricants and specialty products segment reported higher income from operations and Quaker Chemical posted a net loss, for the quarter ending March 31.
Clean Harbors’ Safety-Kleen segment and Heritage-Crystal Clean’s oil business segment both reported higher revenues for the first quarter, compared to 2019’s first quarter. Both companies noted that although the Covid-19 pandemic’s economic impacts were limited in the first quarter, impacts started to worsen at the quarter’s end.
Base oil production in the United States dropped 9 percent in 2019, according to recently released data, as refiners perhaps let some air out of an over-supplied market. Exports – including those to most of the Americas – decreased, and imports swelled as domestic usage remained relatively flat.
Fog and floods are regular disruptors to barges carrying base oils on rivers. Suppliers and buyers can take steps to minimize impacts, though not to escape them completely.
The Covid-19 outbreak is proving to be the most disruptive event for the base oils and refining industry since the Great Recession of 2008, causing refiners to cut back on production or temporarily shutter operations altogether, sources tell Lube Report.