Thai oil refiner IRPC saw profit from its base oils unit improve in the third quarter of the year from the previous three months as feedstock costs fell and sales volume rose.The base oils unit’s gross profit of 818mn Thai baht ($22.21mn) in the three months to end-September almost doubled from Bt412mn in the second quarter of the year and from Bt114mn in the first quarter.Profit was still less than half the year-earlier level of Bt1.87bn.Profit in 2021 was unusually high amid a combination of high base oils prices and low feedstock costs.Base oils prices have been lower this year and feedstock costs much higher.Unusually high diesel prices relative to crude also incentivized refiners to maximise middle distillates production. IRPC’s refined products sales volume rose in the second quarter to the highest since 2019..The incentives changed in the third quarter as diesel values eased relative to crude and base oils values improved.Regional Group I base oils prices fell by 6pc in the third quarter from the previous three months.Crude oil prices fell more steeply, by 14pc during the same period.Firmer base oil values relative to crude incentivized moves to raise production even with the drop in outright base oils prices and a seasonal dip in demand in southeast Asia.IRPC’s base oils production rates rose to 90pc of capacity in the third quarter of the year, up from 83pc in the second quarter.The higher output cushioned the impact of lower prices, boosting third-quarter sales by 8pc from the previous three months.Higher output also enabled buyers in markets like China to replenish Group I supplies like bright stock ahead of planned plant maintenance in Thailand during the fourth quarter of the year. .Thailand's September base oils exports rise.The rise in output and sales and the wider base oil premium to crude helped to lift IRPC’s base oils gross profit margin to 10.9pc in the third quarter.The margin was up from 5.9pc during the previous three months and the highest in a year. It also rose above IRPC's refined product margin for the first time this year.The profit margin remained well below more typical levels of more than 26pc in the four years before 2020..Thailand IRPC base oil profit stays low
