Güney Devrim İldiri discusses how Nynas can benefit from changes occurring in the world
Nynas has traditionally focused on applications in which oil lasts a very long time, can be recycled and reused, and it is not burned as fuel. Now we are taking a further step along the same road. In order to meet the needs of selected market requirements, we have developed a new range of BIO products based on renewable feedstocks. First, we launched NYTEX BIO
® 6200, which will support tire manufacturers in reaching their sustainability goals. We take justified pride of launching another BIO product, this time for the electrical industry in late autumn last year. Responding to changing market requirements means we can engage in new opportunities and value trends, allowing us to grow together with our customers.
Another significant change is that the International Maritime Organization ( IMO) put into effect new regulations on 1 January 2020, which lowers the global sulphur limits for marine bunker fuel from the current 3.5 percent to 0.5 percent, thus affecting 3.7 MMb/ d of fuel demand from the shipping industry. This is a decision which will have a significant effect on the refining and base oil sector, which is already in a period of transformation due to the closure of Group I plants in favor of the technologically more advanced Group II and III plants. A lower Group I capacity will increase demand generally for heavier NSP products, and in addition will reduce the supply of other higher solvency base oils, creating a space which NSP products will need to fill.
It seems likely that IMO 2020 will further accelerate Group I closures, while the remaining plants, particularly those processing sour crudes – are expected to see a sharp drop in margins, as high sulphur by- products are discounted. Similarly, Group II and III plants are likely to see profitability increase as high sulphur feedstock prices fall. This does not necessarily mean that the expansion of Group II and III plants will go hand in hand with the closure of Group I capacity, and hence the market may experience a certain oversupply in the short term with poor profitability for base oil suppliers in certain products and/ or regions.
Restructuring of Group I capacity will continue to primarily affect Europe, which will increase demand for NSP, driving an additional future sales optimization for Nynas.”