Keeping pace with the automotive sector, the demand for industrial oil is eyeing exponential
growth in Bangladesh.
And the oil players have already established their footprints in this segment. Also, the growing industrial sector is on the way of setting up efficient machinery to be used in the factories.
The demand from the industrial machinery and equipment application also accounts for a major market share and is driven by the end-user sectors such as power, manufacturing, logistics, automotive manufacturing, and others.
The growth of the power sector has already highlighted the industrial oil in our country.
With the prospective textile sector, the untapped industries which are yet to explore are steel manufacturing, cement, and the growing plastic.And in the near future, the manufacturing of automotive vehicles and motorcycles will create the opportunity for the marketer.
To know the current status of it, we tried to find out the key barriers that are facing by the marketer.
With extensive working experience in the industrial arena, Rajat Chakraborty, Assistant General Manager to Runner Lube and Energy Limited, said, “We mostly face the short cummings on technical knowledge among the user end.”
Most of the case, it has been observed that the operators of the production unit of the factories use OEM product until the warranty period of the machinery, which is recommended by the manufacturer. But after that, the operators have a tendency to change the brand to save a little amount of money.
In this regard, Mr Rajat said, “Unfortunately, we found that to save a little amount of money for purchasing the oil, you are playing with the lifespan of your machine.”
“Immediately, you aren’t facing the trouble. But in the long run, the lifespan of your highly expensive machinery is decreasing, which is in threat,” he added.
Currently, industrial oil segment holds the third-largest demand after mineral-based monograde segment and automotive-based multi-grade segment.
With an estimated annual consumption of around 45,000 tonnes in 2018 that is projected to reach the 52,500 marks by 2019.
This industrial sector accounts for around 30% of the total lubricant oil consumption.
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This winter, natural gas prices have been at their lowest levels in decades. On Monday, February 10, the near-month natural gas futures price at the New York Mercantile Exchange (NYMEX) closed at $1.77 per million British thermal units (MMBtu). This price was the lowest February closing price for the near-month contract since at least 2001, in real terms, and the lowest near-month futures price in any month since March 8, 2016, according to Bloomberg, L.P. and FRED data.
In addition, according to Natural Gas Intelligence data, the daily spot price at the Henry Hub national benchmark was $1.81/MMBtu on February 10, 2020, the lowest price in real terms since March 9, 2016. Henry Hub spot prices have ranged between $1.81/MMBtu and $2.84/MMBtu this winter heating season (since November 1, 2019), generally because relatively warm winter weather has reduced demand for natural gas for heating. Natural gas production growth has outpaced demand growth, reducing the need to withdraw natural gas from underground storage.
Dry natural gas production in January 2020 averaged about 95.0 billion cubic feet per day (Bcf/d), according to IHS Markit data. IHS Markit also estimates that in January 2020 the United States saw the third-highest monthly U.S. natural gas production on record, down slightly from the previous two months.
IHS Markit estimates that U.S. natural gas consumption by residential, commercial, industrial, and electric power sectors averaged 96 Bcf/d for January, which was about 4.4 Bcf/d less than the average for January 2019, largely because of decreases in residential and commercial consumption as a result of warmer temperatures.
However, IHS Markit estimates that overall consumption of natural gas (including feed gas to liquefied natural gas (LNG) export facilities, pipeline fuel losses, and net exports by pipeline to Mexico) averaged about 117.5 Bcf/d in January 2020, an increase of about 0.2 Bcf/d from last year. This overall increase is largely a result of an almost doubling of LNG feed gas to about 8.5 Bcf/d.
Because supply growth has outpaced demand growth, less natural gas has been withdrawn from storage withdrawals this winter. Despite starting the 2019–20 heating season with the third-lowest level of natural gas inventory since 2009, by January 17, 2020, working natural gas inventories reached relatively high levels for mid-winter. The U.S. Energy Information Administration’s (EIA) data on natural gas inventories for the Lower 48 states as of February 7, 2020, reflect a 215 Bcf surplus to the five-year average. In EIA’s latest short-term forecast, more natural gas remains in storage levels than the previous five-year average through the remainder of the winter.
According to the National Oceanic and Atmospheric Administration (NOAA), January 2020 was the fifth-warmest in its 126-year climate record. Heating degree days (HDDs), a temperature-based metric for heating demand, have been relatively low this winter, which is consistent with a warmer winter. During some weeks in late December and early January, the United States saw 25% to 30% fewer HDDs than the 30-year average. This winter, through February 8, residential natural gas customers in the United States have seen 11% fewer HDDs than the 30-year average.
Source: U.S. Energy Information Administration, based on National Oceanic and Atmospheric Administration Climate Prediction Center data
Headline crude prices for the week beginning 10 February 2020 – Brent: US$53/b; WTI: US$49/b
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