Mr. Lewis Gaines

GLG News by Mr. Lewis Gaines, Former Market Manager

GLG News is now G+ Insights

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Motor OIl Re-Refining Gains an Important Advocate in Valvoline

June 30, 2011

Analysis of:Many Happy Returns | digital.olivesoftware.com

Tiny compared to virgin basestock production, re-refined oils are entering a very favorable scenario with both high product values and attractively low used oil acquisition costs. Historically, US retail consumer use of recycled oil has been limited due to the lack of major brands. Valvoline's entry into the market will be an excellent evaluation of customer's current value perceptions. Without internal basestock production, Ashland's Valvoline division is an ideal partner for Safety Kleen.

Chemtura Exits Bankruptcy with Potential for Improved Lubricant Profits

November 19, 2010

Analysis of:Chemtura Exits Bankruptcy | www.imakenews.com

Chemtura has a varied mix of profitable lubricant related businesses which will likely improve over recent mediocre results. Operating margins of 8-10% have been recently reported for their Industrial Performance Products Segment which consists mostly of lubricant related additive components, lubricant basestocks, and finished synthetic lubricants. These margins are considerably below those being generated by their competitors in similar businesses.

GM's Entry into Lubricant Licensing Leading to Complications

August 17, 2010

Analysis of:Shell Embraces, Valvoline Snubs Dexos | www.imakenews.com

Valvoline has taken an initial position that they are unwilling to pay the significant licensing fees GM is requiring for using their dexos specification. Instead they will fall back on the "free" statement that their oils meet the dexos technical requirements and warranting the performance to the consumer. Shell, the largest marketer of oil in the world, will pay the license fees.

Are Expanding Regional Lubricant Additive Suppliers a Competitive Threat?

July 28, 2010

Analysis of:Belarus Additives Eye New Markets | www.imakenews.com

LLK-NAFTAN a lubricant additive supplier in Belarus recently announced plans that it will expand its marketing area the Mid-East and parts of Asia. The company supplies individual additive components including detergents and anti-wear agents. More interestingly, it provides a selection of multi functional additive packages. These products are are blended with basestock to produce usable lubricants for gasoline and diesel engines.

Lubrizol and BASF Consider Cognis Purchase

April 15, 2010

Analysis of:Cognis sale heats up as Lubrizol joins fray | www.reuters.com

Cognis offers an attractive mix of chemical speciality products with potential synergies for both Lubrizol and BASF. Lubrizol, frustrated by its slow growing additive markets and flush with cash, is being drawn to Cognis's complementary products in ester lubricants, gear oils and metalworking. BASF is striving to improve margins. Cognis's extensive product line might be best split between the two companies.

Newly Aggressive Auto OEM's Prospect in the Oil Business

March 1, 2010

Analysis of:Here Soon: New Oil Standards | www.asashop.org

Seeking greater control over its global lubricant specifications, GM has announced that its 2011 cars will be required to use its new dexos licensed oils. GM will receive licensing and royalty fees from the oil companies while simultaneously improving consumer awareness of its engine technology. This is smart move by GM which will also benefit the lubricant additive supplies including Lubrizol and Newmarket.

Lubrizol Surprises as Analysts MIss a Changing Specialty Chemical Environment

October 23, 2009

Analysis of:Lubrizol forecasts 3Q profit above Street view | finance.yahoo.com

Lubrizol and Newmarket both recently announced drastically improved sequential profit margins in a difficult general business environment. The doubling in run rate operating margins in 2009 suggests a structural change in the supplier customer price negotiation process. What happened in the lubricant additives business could also happen in other specialty chemical areas. The key requirement is that suppliers mange their product profile to help improve their customers profitability.

Newmarket Expands Cautiously in Asia's Growing Lubricant Additive Market

July 29, 2009

Analysis of:Afton Invests in Asia Pacific | www.imakenews.com

Newmarket will expand in Asia via toll processing rather than the more typical approach of major plant construction. Their approach is strategically consistent with a relatively small initial market share and a desire to minimize capital investment. The lubricant additives industry continues to avoid overbuilding in a slowly growing global market

Holly's Tulsa Refinery Purchase Opens New Options for Margin Growth in Lubricants

April 22, 2009

Analysis of:Holly Buys Sunoco Tulsa for $65M | www.imakenews.com

Lubricant sales are a hidden gem in the Tulsa refinery purchase. Sunoco has built a good reputation marketing these high margin products. Holly Corp's planned investment in hydrotreatment for ultra low sulfur diesel fuel will offer potential upgrades to the lubricant slate as well. Lubricant base oil has the highest value upgrade over crude of any high volume refinery product. If managed well, Holly's strategic expansion has significant profit potential.

Stable Global Lubricant Demand Will Maintain Profitability of the Industry

March 4, 2009

Analysis of:Hot Lube Markets Will Weather Downturn | www.imakenews.com

Fuchs Petrolube is projecting only a slight decrease in global lubricant demand in 2009 with stable to growing volumes beyond this near term horizon. Stable volumes imply that the lubricant companies will see only minimal volume changes. Public additive suppliers such as Lubrizol and Newmarket should also see little change in their volumes and continued margin stability. The margins of the lubricant marketers such as Fuchs Petrolube, Ashland (owner of Valvoline) and the integrated oil companies should continue to reflect currently strong levels.

IRS Biodiesel Regulations Will Benefit Fuel Additive Companies

January 21, 2009

Analysis of:IRS Proposes Biodiesel Tax Incentive | www.irs.gov

By mandating minimum low temperature performance to obtain important tax credits, the IRS is insuring a growing market for cold flow improvers. These products are well established technically, more economic for the fuel suppliers than most alternatives, and highly profitable for the fuel additive companies that supply them.

Oil Refiners Do the Green Thing for the Right Reasons--Higher Profits

December 17, 2008

Analysis of:ExxonMobil to Invest over $1 Billion to Increase Cleaner Diesel Supply | biz.yahoo.com

ExxonMobil will invest $1 Billion to expand world wide diesel capacity by about 6 million gallons/day by 2010. The decision is driven by a worldwide diesel refining capacity shortage as diesel displaces gasoline as the preferred liquid transportation fuel. Selected chemical specialty companies will benefit from growing diesel consumption

Growing Demand for Diesel is Creating Growth for Fuel Additive Chemical Companies

May 20, 2008

Analysis of:Diesel Prices Soar Ahead of Olympics | online.wsj.com

Higher diesel prices relative to gasoline reflect the growing use of this more energy efficient transportation fuel. Increasing volumes of diesel fuel are generating good profits for the fuel additive companies and enhancing their already attractive current margins.

Favorable Trends Should Drive Additive Margins for Lubrizol and Newmarket to Higher Levels

August 10, 2007

Analysis of:Additive Earnings Soar | www.imakenews.com

1Q and 2Q margins for additive companies including Lubrizol, Newmarket and Innospec were strong. Significant changes in industry behavior and technology are combining to position these businesses for even higher future earning power.

Toyota Avoids Starting Fires, but GM and A123 Systems May Smoulder

August 9, 2007

Analysis of:Toyota Delays Next Hybrids on Safety Concerns | online.wsj.com

Toyota has delayed producing vehicles with lithium ion batteries based on concern about fire and explosion risk in these large systems. GM on the other hand continues to work with A123 Systems on extended electric range lithium hybrids. Extended electric range vehicles, a poor economic concept, suffer from safety issues as well. GM's effort, which I consider to be mostly PR in nature, will also not deliver and will have significant impact on A123 Systems.  

Perhaps a Little Too Much Gas in the Conoco Peabody SNG Proposal

July 30, 2007

Analysis of:Peabody and ConocoPhillips Enter into Agreement to Explore Developmnet of Midwest Coal-to-Substitute Gas Facility | www.conocophillips.com

The expensive and capital intensive parts of coal upgrading to cleaner and more flexible fuels are gasification followed by conversion to synthesis gas. Fuel generation from synthesis gas (whether to liquids or to methane) is straight forward by comparison. We should let the market place decide the optimum fuel product and encourage any needed government help to focus on the gasification section. Allowing political leverage and entrenched infrastructure interests to heavily influence the final fuel product will not produce the most effective fuel mix.

Toyota Moves into Plug-Hybrids the Right Way, Very Slowly

July 27, 2007

Analysis of:Toyota Mulling Increasing Battery Output Capacity For Hybrids | online.wsj.com

In addition to confirming the phantom nature of large scale lithium batteries, Toyota is restricting the electrical range of its demonstration plug in vehicles to 8 miles. A very logical decision which reflects the economics of battery storage. A hybrid's current 2-3 mile battery costs on the order $3000 and its cost will be proportional to its range capability. Lithium battery costs for comparable cycle life to Ni-MH batteries are even higher. Toyota recognizes that a hybrid vehicle cost premium approaching $10,000 is perhaps too high for the market to tolerate.

Coal coversion to natural gas could be the next act in our energy policy farce

July 23, 2007

Analysis of:Peabody and ConocoPhillips Enter into Agreement to Explore Development of Midwest Coal-to-Substitute Natural Gas Facility | biz.yahoo.com

A project to gasify coal for the purpose of converting it to pipeline quality gas is a good example of incentivized research that makes little economic sense. Coal gasification is the expensive part of the process with excess carbon dioxide emissions and high capital costs. The far better end products would liquids that can garner premium prices as transportation fuels or chemical feedstocks.

Rising Energy Costs Yield Higher Margins for Specialty Chemicals

July 16, 2007

Analysis of:Why Apollo Was So Keen | online.wsj.com

Speciality chemical companies are attracting more interest from private equity. They are also consolidating in typical synergy seeking industry fashion. Although perhaps counter intuitive, rising energy costs raise margins for these companies. Energy and feedstock costs are relatively small  (as compared to commodity businesses) while the added value of their products is becoming higher. Crude's higher trend line is good news for these businesses which improve the effectiveness and economics for a wide range of petroleum based products.

Major Commuter Railroad Accelerates Switch to ULSD--Additive Suppliers Will Benefit

July 10, 2007

Analysis of:Low sulphur | www.railwaygazette.com

As the US Diesel market switches to mostly ULSD, commercial users are accelerating their rollover to the lower sulfur fuel. The railroad lubricant market has historically been slow changing due to the large capital investments in locomotives and a long history of reliable operation with current technologies. The switch to ULSD will provide additional sales opportunities to the lubricant and diesel additive suppliers as they introduce additional components to compensate for the loss of intrinsic sulfur's fuel lubricity.

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