The arrival of January symbolizes the beginning of a fresh year, but this time around it also portends the inauguration of a new U.S. president.
While most people would agree that it is going to be an interesting year-to say the least-many are apprehensive about the future direction of the country.
A similar nervousness, though more limited in scale, took hold of the base oil market when additional capacity was set to come on stream in the U.S. in the last couple of years.
First it was the startup of Chevrons API Group II plant in Pascagoula, Mississippi, in 2014, and then the ExxonMobil expansion of its Baytown, Texas, plant in 2015, which many experts predicted would bring about a tsunami of product that would flood the market.
While fundamentals did reflect the new capacity to a certain extent, the wave of additional base stock never had the devastating effect that many had feared.
Experts presenting at the ICIS Pan American conference in Jersey City, New Jersey, last month acknowledged that what turned out to be a smaller tsunami of new projects has already occurred, and many ventures that were expected to come on stream in the next five years have been cancelled or shelved indefinitely.
Much of the new capacity has been placed, but there is no doubt that additional volumes emerging from the Middle East will bring about a disruption in the traditional trade flow and add pressure to already embattled prices.
However, the new dawning requires fresh ways of thinking and operating, and this year may usher in not only many challenges, but also many opportunities.
With the market moving towards lower viscosity lubricants, which will require additional API Group II and III base oils, and the migration of Group I volumes to more profitable high viscosity niches, there may be new opportunities for every producer. Nobody says it is going to be easy, but keeping an open mind and exploring possible options in developing areas could be the key to a successful 2017.