Farewell, 2020!
Who wants to hold onto 2020? Most people will probably be happy when it is finally over. Aside from a few bright spots here and there, the whole world lived on edge this year, mainly because of the emergence of a deadly, mysterious virus that upended life as we knew it.
Around the world, populations were stressed because of the spread of infections and increasing coronavirus-related deaths. In many places, sociopolitical tensions piled on, sometimes manifested in marches and protests.
The pandemic also caused severe demand destruction in the base oil industry, and although many segments seemed to bounce back in the second half of the year, a large number of businesses suffered irreparable damage.
Beginning in March, when the first lockdowns were implemented, refineries and manufacturing facilities were forced to run at reduced rates given coronavirus-related restrictions and poor demand for refined products, including fuels and lubricants. This situation continued to affect business throughout most of the year.
Between late August and November, a series of hurricanes reduced operating rates and unplanned shutdowns along the United States Gulf Coast, coinciding with an uptick in domestic demand and export activity once the lockdowns were lifted. The combination of these conditions led to a sudden tightening of supplies and upward pressure on base stock prices.
Isolated posted price increases on paraffinic base oils emerged first in August, followed by a more generalized round of hikes in September. On the naphthenics side, suppliers adjusted prices on a case-by-case basis, with Cross Oil putting forward an increase in mid-October. Finished lubricant, grease and additive manufacturers also implemented price increases in October and November, driven by the steeper feedstock values and healthier consumption levels.
The industry will bid farewell to 2020 still steeped in uncertainty, although many questions related to the general elections in the U.S. were resolved in early November with the appointment of Joseph R. Biden Jr. as president-elect. While the change in the governing party may bring challenges to the oil industry, there will also be many new opportunities.
The year ends with hopes that a coronavirus vaccine is developed to stop the disease and with wishes for 2021 to be a more gentle, peaceful and prosperous one.
Gabriela Wheeler is base oil editor for Lubes’n’Greases. Contact her at Gabriela@LubesnGreases.com.