Oil refiner Thai Oil’s base oils and lube unit saw profit fall in the second quarter from year-earlier levels, reflecting the stark contrast in supply-demand dynamics between this and last year.The unit’s profit before interest, taxes, depreciation, and amortization (EBITDA) fell to 735mn Thai Baht ($20.8mn) in the three months to end-June. Profit was down 58pc from year-earlier levels..Profit in 2021 was an aberration. Profit surged as unusually tight supply and strong demand triggered a rise in base oil prices that far outpaced feedstock costs.Excluding 2021, the unit’s second-quarter profit was up more than 60pc from the first three months of this year and the highest since first-half 2017.Profit got support from a 32pc rise in sales in the second quarter from year-earlier levels to the highest in more than five years.Sales rose as regional Group I base oils prices rebounded in the second quarter of the year after correcting lower during second-half 2021.The unit also boosted its sales volume to 60,000t in the second quarter, from 59,000t in each of the previous three quarters.Sales got a further boost from strong demand in Thailand’s domestic market. The country’s lube demand has risen strongly following the gradual relaxation of pandemic-related restrictions since early this year..Thailand's June lube demand extends rise.Base oils prices rose faster than feedstock costs in the second quarter of the year. But their premium to crude and diesel was much lower than during the same period in 2021.The smaller premium cut the unit’s profit margin. Its EBITDA margin of 8.8pc in the second quarter was down from 27.8pc during the same period last year. But it was up from 6.7pc in the first three months of this year and well above typical levels in the two years to mid-2020.A key difference with those years before mid-2020 was Thai Oil’s refining margin, which barely broke even during that period. The weakness then contrasted with a refining EBITDA margin of 13.4pc in the second quarter of this year..Thai Oil’s Q1 base oil profit falls
