Thailand's Sept base oils supply lags demand

Thailand’s base oils supply lagged demand in September for the first time in three months as a surge in exports cleared an overhang of surplus Group I base oils from the country.

More balanced supply curbed domestic refiners’ urgency to clear additional volumes.

It also cut their immediate exposure to downward price-pressure and increasingly squeezed margins in Asia’s Group I base oils market.

Any such benefit could be short-lived if base oils output held at firmer levels during the fourth quarter and the Asia market continued to receive offers of additional Group I volumes from northeast Asia.

Thailand’s Group I base oils output of almost 54,000 kilolitres (48,000 tonnes) in September edged down from close to 55,000 kilolitres the previous month, government data showed.

Output fell even as domestic refiner Thai Lube’s Group I base oils production extended its recovery to a six-month high.

The refiner’s output almost ground to a halt in July because of plant-maintenance work.

With imports holding firm, Thailand’s total supply held steady at close to 87,000 kilolitres in September.

The country’s demand by contrast rose to a seven-month high in September on the back of a jump in Group I base oils exports.

The exports included a surge in flows to Singapore and a jump in shipments to China. They also included the first cargo to India since late last year.

Higher exports and a recovery in domestic lube consumption lifted Thailand’s total demand to around 88,000 kilolitres in September.

The volume was up from a more-than-four-year low of less than 55,000 kilolitres the previous month and outpaced supply for the first time since June.