The Terrible, Horrible, No Good, Very Bad Slack Market
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2014 marked the end of an era as Exxon closed down its mid to low melt slack production. Warning the industry for years that a shutdown was eminent, the spigot was finally shut off in fourth quarter of 2014. Globalwax LLC secured the final barge and was able to provide a buffer for those last customers that still required Prowax 310 until a final substitute can be found. In addition to the Prowax 310 we also secured one of the final barges of the Prowax 320 in the end of 2014.
Unfortunately, Exxon is not the only player exiting Group I base oils. Shell Pernis in the Netherlands will be closing its doors at the end of 2015/start of 2016. Colas Group in France will end Group I production. Total of France ending Group I production. Nynas of Germany will also be ending Group I production. Group I Base oil production is being dropped in favor of more lucrative Group II and III base stocks. While more complex processes are used to produce these products, the end results are cleaner, better properties, and generate higher revenue. In short this means lower supply of petroleum slacks and low melt waxes. While the price of oil seems to be slightly recovering, its decline over the past few quarters have had little effect on the price of waxes.
For more information on refineries that have since shut their doors please see: A Barrel Full, "Refineries That Are Closed Down".