Mississippi river flooding problems mixed for US base oils

10 May 2011 21:39  [Source: ICIS news]

HOUSTON (ICIS)--High water and flooding on the Mississippi river posed mixed problems for the US base oils market, buyers and sellers said on Tuesday.

The US Army Corps of Engineers projected the river to crest at 57.5ft (17.5 metres) by 19 May at Vicksburg, Mississippi, the site of Ergon’s 11,300 tonne/year naphthenic production facility.  

Ergon said in an industry update that flood gates have been installed, and rail trans-loading facilities and alternative rail loading locations are available this week.

Additional levees have also been added to the dike walls surrounding the refinery, according to Ergon’s updates.

Other naphthenic and paraffinic base oils sellers and buyers verified that deliveries are ongoing, with no disruptions taking place because of the rising Mississippi water level.

“We’re not experiencing supply disruptions, but we have noticed rail cars are getting harder to locate,” one large buyer said.

Barge traffic was the crux of the logistics concerns, sources said. Where barge deliveries were needed along the river, alternatives – mostly rail – had to be used.

A major buyer, not located on the Mississippi river, but near a major tributary, said it was clear that suppliers’ efforts to keep deliveries in place were challenging, but effective.  

“We’re using a variety of alternatives, but we are keeping up with deliveries,” one supplier said.

A distributor said it was not having trouble with logistics, but added that it had negotiated various contingencies with customers to use alternative terminals where needed.

US paraffinic and naphthenic base oil supply/demand fundamentals are tilted strongly toward demand, as a faster-than-expected economic recovery prompted buyers to restock during the first-quarter turnaround season, now largely ended.

A series of weather outages prolonged several turnarounds and caused scattered bouts of unplanned downtime because of power disruptions.

US paraffinic and naphthenic base oil supply remains tight, and is expected to remain so throughout May.

Suppliers announced double-digit price increases throughout the industry on all grades of base oils between 1 April and 1 May.

SN100 posted prices rose 35 cents/gal, from $3.84 to $4.19, while brightstock was hiked 40 cents/gal, from $4.87 to $5.27/gal by one major producer.

By: Judith Taylor
+1 713 525 2653

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