Thailand’s base oils output stayed higher in August for a second month, enabling the country’s refiners to cover strong domestic and overseas demand for Group I base oils.Total Group I base oils output of 58,500 kilolitres (52,000 tonnes) in August edged down from 61,800 kilolitres the previous month, government data showed.The volume rose by 3% and for a second month from year-earlier levels to the second-highest level in seventeen months. The highest volume during that time was in July.The rise in output was timely.Asia’s Group I base oils production capacity already fell sharply in recent years following the closure of two base oils units in Japan.The extended shutdown of another Group I unit in Japan since July tightened further the country’s supply.China’s Group I base oils supply is also set to tighten following the planned closure of a key base oils plant in the country in the month of October.The drop in regional production capacity partly reflected Asia’s dwindling consumption of Group I base oils.Even so, the lower production capacity left Thailand as one of the key remaining Group I suppliers in the region and the main supplier of regular spot volumes of the product.That role increased the importance of its Group I base oils output staying at higher levels to cover requirements for both domestic and overseas buyers.Firm domestic and overseas demand for Thailand’s Group I base oils in August cut its surplus of production over demand to the lowest level in at least six months.Firm regional Group I base oils prices would incentivize Thailand’s refiners to maintain higher production levels.Those prices continued to trend higher relative to gasoil prices throughout the third quarter of the year.Asia’s base oils margins now faced growing pressure from the sharp surge in crude oil prices since the beginning of this month..Thailand’s August lube demand falls
