Nynas news

03/11/2014 12:46

There is a growing market for specialised oils

H. Ernest Henderson, President K&E Petroleum Consulting, LLC, gives his view on the growing market for specialised oils.

The biggest trend in the global lubricants industry today is the growth of Group II and Group III base stock capacity. This is driven by the automotive industry where the need for high-performance products to meet fuel economy, emissions and durability standards requires premium-quality base stocks like Groups II and III. Recent investments in large-scale plants have created an over-supply of Groups II and III, so we are now seeing a push effect in the formulation of lower-performing products where Groups II and III are being used in the absence of specific performance requirements.

The increase in Group II and III capacity and resultant over-supply has impacted pricing where base stock margins are being continuously squeezed. Over time, the excess capacity and reduced margins will lead to industry rationalisation, especially for Group I production facilities, which have a cost disadvantage compared with Group II and III plants and will struggle to survive during this period.

Many industrial lubricants require heavy-viscosity base stocks including Bright Stock. The transition of the paraffinic pool from Group I to Groups II and III is posing a problem to industrial oil blenders as Group II and III plants do not typically produce heavy-viscosity base stocks, especially Bright Stock.

Blenders are now searching for alternatives for their higher-viscosity industrial formulations. Fortunately, there is a growing market for specialised oils that offer an alternative to heavy Group I base stocks. These specialised oils can even provide improved performance in selected areas that cannot be achieved with Group II, Group III or even Group I. Naphthenic oils are an example of these specialty oils that are beginning to penetrate these niche industrial areas.

The key success factor for any specialised supplier is to offer a cost-effective product with the potential for performance differentiation. If you cannot demonstrate a quantifiable point of differentiation, the market will rapidly revert to one that is simply price-driven. Having a competitive advantage offering is important in an over-supplied market. Nynas has a value offer proposition in that sense and is therefore well equipped to meet the needs of the industrial oil formulator.

Text: Anne Margrethe Mannerfelt

Further reading

Extension of Nynas reorganisation approved

Södertörn's District Court today approved an extension of Nynas company reorganisation for another three months, until June 15. The reorganisation process will now continue with a focus on actions for removal of US sanctions applicable to the company and to finalise the long-term funding.

Read more about Extension of Nynas reorganisation approved

Nynas business continuity - COVID-19

The WHO declared on March 11 that the global COVID-19 outbreak should now be classified as a pandemic, since it has spread to several countries around the world. At Nynas we take this situation very seriously and are doing our utmost to secure the business continuity and to limit the spread of the virus.

Read more about Nynas business continuity - COVID-19

Nynas applies for extended reorganisation

OFAC ready to initiate process for removal of sanctions applicable to Nynas.

Read more about Nynas applies for extended reorganisation