Japan’s surplus of base oils supply over demand stayed lower in July as rising domestic consumption magnified the impact of falling base oils output.Total supply, or base oils and lube production and imports combined, came to 205,800 kilolitres (182,000 tonnes) in July, government data showed.The volume rose from 198,200 kilolitres in June but still fell for a fifteenth month in sixteen from year-earlier levels.Supply fell as a prolonged drop in domestic base oils output far outweighed a rise in imports.Output of 187,300 kilolitres in July rose from 173,600 kilolitres in June but still fell by 9% and for a sixteenth month from year-earlier levels.Output fell following the closure of a Group I base oils unit in the fourth quarter of last year. The move followed the closure of another Group I unit in second-half 2022.Output could face more downward pressure during the third quarter of this year because of the extended shutdown of one of the country’s major base oils units following a fire in July.Japan’s lower base oils output contrasted with firmer domestic demand.Base oils and lube consumption of 163,700 kilolitres rose by 11% in July and for the third time in four months from year-earlier levels.Higher domestic demand accounted for more than 85% of Japan’s base oils output in July for the tenth time in eleven months since last September.The share was up from for less than 75% of total output in the year to last August.The dynamic slashed Japan’s surplus supply for export over the past year, especially to southeast Asia.Base oils exports of less than 12,000 kiloliters to that region fell by 50% in July and for a tenth month from year-earlier levels. The contraction in July was the smallest during that period.The slump in shipments forced buyers in southeast Asia to target supplies from other sources instead. It also incentivized a more rapid switch to consuming more Group II base oils.The stronger domestic consumption outweighed the drop in exports, lifting Japan’s total demand to 200,800 kilolitres in July, up from 189,400 kilolitres the previous month.The firmer demand cut Japan's supply surplus to around 5,000 kilolitres in July and to less than 25,000 kilolitres in the first seven months of the year.The surplus was down from more than 90,000 kilolitres during the same period last year, even with the slump in exports..S Korea’s July base oils output rises.China’s July base oils output falls
