Thailand May base oil supply stays high

Thailand’s Group I base oils supply rose in May even as some plant-maintenance work cut the country’s output of the lubricants feedstock.

Higher Group I supply in April and May raised the prospect of cushioning the impact of a more extended round of plant-maintenance work starting in July.

A seasonal slowdown in demand at the start of the third quarter and an ongoing fall in lube consumption from year-earlier levels could further help to balance out the impact of the maintenance work.

Thailand’s Group I base oils output of 51,900 kilolitres (46,000 tonnes) in May fell from 58,000 kilolitres in April, government data showed.

The drop in output to a four-month low coincided with maintenance work on a Group I plant during second-half May.

Maintenance work on Thailand's other Group I unit is set to start around mid-July and last much longer, with completion expected around end-August.

The longer shutdown boosted the need to build larger stocks to cover requirements during that period.

Thailand’s base oils exports fell to a fifteen-month low in May, facilitating that requirement.

The drop in exports tightened availability of Group I base oils for other Asia-Pacific markets in May.

But it left Thailand with an increasingly large volume of surplus supplies to carry over the following months.

Thailand’s total Group I supply, or output less domestic and overseas demand, rose in May to the third-highest level since 2022. The fourth-highest level since then was in April.

The rise in surplus supply and drop in exports suggested that this month’s plant-maintenance work could have had a larger impact on the Asia-Pacific market in the second quarter of the year than during the current quarter.

Weaker domestic demand could further cushion the impact of the plant-shutdown.

Thailand’s lube consumption of 37,000 kilolitres in May fell by 14% and for a third month from year-earlier levels.

The timing of the contraction coincided with concern about, followed by the US’ announcement of sharply-higher tariffs on global imports.

Thailand in May slashed its economic growth forecast for this year partly because of concern about a slowdown in global economic growth and the impact of US trade policy on the country’s exports.