A mix of strong demand and short supply has evolved into a market situation not unlike one the U.S. base oil market witnessed just over two years ago. Today's supply crunch developed from a number of factors, with the first being that many base oil plants had been operating at reduced rates. Production curtailments began in late 2008, when demand tumbled off its peak seen earlier that year. Facilities continued to run at lower output throughout 2009 and into 2010 in efforts to keep the supply/demand fundamentals balanced. During some of this time, a string of production problems ensued, leaving the industry with depleted inventories.
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