After many years of trimming excess capacity, the petroleum additives industry suddenly found itself in a shortage position in 2005. While the supply disruptions caused by hurricanes Katrina and Rita triggered this shortage, the foundation was laid by many years of cost-cutting and capacity shuttering that put supply roughly on balance with the demand. Despite the supply tightness, a major expansion is unlikely in the near-term. As market growth continues to be sluggish, it is fraught with a high degree of uncertainty given the introduction of high quality base oils and low-sulfur fuels.
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