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Integrated supply chains the key to post-Covid-19 recovery

Covid-19 took us all by surprise, and the impact on the oil industry was severe. Companies that rely heavily on imports or have converted their refineries to import terminals, such as Caltex and Shell in the Philippines or Mobil in Australia, face greater difficulties in navigating the global disruption.

Wuhan entered lockdown on 23 January 2020. With major parts of China locked down, the lubricant industry lost roughly 80% of its market in February 2020 and 30-40% in March 2020, according to Dr. Z. George Zhang, senior director, Technology, at Valvoline Inc. The demand was not lost forever, he said during the panel discussion on “2020- The Year That Wasn’t: The Pandemic’s Lasting Effect on our Industry” held this morning during F+L Week Virtual. 

Pent-up demand and strong government support provided a strong rebound in April 2020, with reports of healthy performance for lubricant and lubricant additives companies in China during the second half of the year, he said.

In many respects, China and India have led the way in the post-Covid-19 recovery. Desmond Tang, managing director at Vanderbilt Asia Pacific Ltd., based in Hong Kong, attributes the strong resurgence to integrated supply chains. China and India are building to be the world’s factories and are more integrated in terms of upstream raw materials to downstream, suggests Tang. Integrated supply chains mean less reliance on imports, he says. 

Zhang emphasised to F+L Week Virtual delegates the importance of strong business continuity plans in China’s swift rebound, something learned from Western countries. Though, continuity plans can only do so much for a business that is overly reliant on the import of raw materials or finished goods, says Mae Ascan, fuels & lubricants supply chain consultant. Ascan was speaking as part of the expert panel.

Cheaper raw materials early in the pandemic helped producers to boost their production, with all industry players reaping the benefits of the low cost of goods sold in 2020. However, shipping disruptions have caused a spike in base oil prices in India. Currently fuel, base oil, and lubricant prices are at an all-time high in India, says Dr. T.C.S.M. Gupta, senior vice president, Quality, R&D and Technical at Apar Industries Limited. However, Gupta indicates there is widespread understanding of the issues driving the historic price increases. “Nobody is complaining,” he says.

F+L Week Virtual continues tomorrow with a panel discussion entitled “Sustainable Mobility – Fuels & Lubricants Development” at 3-4 PM.

Registrations are still available for F+L Week Virtual 2021. All video presentations will remain accessible even after the event ends this week.

To register for F+L Week Virtual 2021, go to https://www.tickettailor.com/evenhttps://www.tickettailor.com/events/flweek/487352#.