Thailand’s May lube demand rises

Thailand’s lube demand rose more strongly in May, adding to signs of higher-than-expected consumption throughout the Asia-Pacific region that month.

Firmer demand would cushion the impact of a rise in Asia’s base oils supply in the month of May.

Thailand’s Group I base oils exports also rose in May even with the rise in domestic lube demand.

The pick-up in shipments to overseas markets suggested that premium-grade base oils were covering more of the country’s rising consumption.

Such a trend could free up additional Group I base oils supplies for overseas markets even if the country’s domestic lube demand continues to rise.

Any such pick-up in supplies would be welcome in a regional market that has struggled with tight Group I supply fundamentals so far this year.

Asia’s firm Group I base oils prices in recent months reflected those tight fundamentals.

Thailand’s lube consumption of 42,700 kilolitres (37,800 tonnes) in May rose from less than 33,000 kilolitres in April and by 14% from year-earlier levels, government data showed.

Demand had flatlined or fallen in each of the previous three months.

Demand improved in May because of a 9% rise in engine oils consumption, following a contraction in each of the previous three months.

Thailand’s base oils sales also rose in May for the third time in four months from year-earlier levels. But they fell from April.

The slowdown cut base oils sales as a share of the country's lube demand to 25% of the total, down from at least 30% in each of the previous three months.

Lower base oils sales freed up more volumes for export.

Shipments to overseas markets duly rose to more than 20,000 kilolitres in May.

Exports rose from year-earlier levels for the first time this year to the highest in eight months.

The drop in overseas shipments in the intervening months compounded the tight supply of Group I base oils in the Asia-Pacific region.

The May exports included a surge in shipments to Singapore to a twenty-two-month high of more than 15,500 kilolitres.

The rise in shipments added to signs of tight supply and firm demand for Group I base oils in the island-state.