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Sudip Shyam talks at International Lubricants Conference


2021-05-05 09:11:57

The first ever International Lubricants Conference was held virtually last week. The two-day event, themed ‘The Future of Africa’s Lubes Market’, featured a panel of experts from around the world, including Mocoh’s Global Head of Base Oils Sudip Shyam.

"The oil and lubes markets have been extraordinary the last 18 months,” explains Shyam, who gave an analysis of the current global lubes market and the impact of the on-going pandemic, and gives a recap of his presentation below.

“Most of the world, with the exception of China, is still rallying a recession as a result of COVID-19. Global debt levels have reached historic highs; national GDPs went into the negative last year; and economic activity is projected to be weak in the MENA and SSA regions in 2021. These are exceptional times, and unsurprisingly our partners and customers want to understand why this is and what it means for our industry,” Shyam continues.

“In 2019, the global lubes market (excluding marine lubes) was estimated to be around 36mmt. But in 2020 this volume dropped significantly, and it is anticipated that we will see little to no growth for the next two - three years.

“The reduced availability of base oils over the last 12 months has seen prices rocket and suppliers going as far as reviewing term commitments. The cost of BS 150 hit 1,900-2,000 $/mt FOB in April this year, compared to 400$/mt in May 2020, and it exceeded 2008 prices by 250-300 $/mt.  While the cost of SN 500 rose to 1,600-1,750 $/mt in April, versus 380 $/mt in May 2020 and breaking 2008 prices by 200$/mt.  Many markets witnessed higher export prices than domestic prices for the first-time ever!”

An unprecedented series of events has been the cause of such disruption. COVID-19, along with multiple turnarounds and the closure of a number of important refineries has had a significant impact on capacity during 2020 and 2021.  Reduced refinery activity has meant less feedstock for base oil production, despite strong margins.

“We have witnessed base oil prices rise to unusually high levels with hitherto unforeseen premiums to crude and diesel.  Buyers in some markets have now started holding back purchasing base oils, because they deem prices too high.”

Reassuringly, a number of these refineries are due to come back onstream during the second half of 2021. “This, combined will seasonal trends should result in changing supply chain dynamics,” Shyam adds.

The containerised freight industry has not gone unaffected either, Shyam explained: “When nations around the world went into lockdown in March last year, the shipping industry saw a sharp downward trend and warehousing costs for containers went up.  Consequently, many companies decided to get rid of old containers. But this resulted in less availability when things began picking up. As China began re-opening in mid-2020, many shipping lines diverted east where they enjoyed better margins, while the rest of the world continued with various lockdown measures and the movement of vessels was still limited.”

He anticipates the current situation will likely persist for another few months as the pandemic continues to cause disruption, and advises: “Considering the shortages, I recommend you continue to book shipments well in advance - that is if you want freight to arrive on time!”

Over 130 participants dialled in for maiden the ILC event. Attendees represented a cross-section of industry stakeholder groups, in particular buyers and vendors. Sudip Shyam was joined by fellow panel members Peter McGrath of Innov Oil Pte Ltd., Singapore, Mervin Naidu from Unichem Services Pty Ltd. in South Africa, Indu M Gupta, Product Research and Development Director at Innova Refining & Trading FZE in the UAE, and Franklin Oranusih, General Manager of Pacegate Energy and Resources Ltd., Nigeria.

Mocoh was one of a handful of sponsors of the event.

Find out more: https://ilconline.co.uk