Italy’s Sept base oils output edges up

Italy’s base oils output stayed low in September, even after the restart of a major base oils unit earlier in the third quarter, amid signs of a sharp fall in demand.

Even the low output level far outpaced base oils demand, triggering a surge in the country’s base oils stocks to a 10-month high.

The trend pointed to a steep fall in base oils demand that outweighed refiners’ run-cuts as they focused on maximizing diesel production.

The drop in European base oils prices in recent months reflected pressure from rising surplus supply. It may yet to have fully reflected signs of even weaker-than-expected demand.

Italy’s base oils output of 64,820t in September edged up from 62,340t the previous month and from 64,360t in July, government data showed.

Output remained far below average levels of more than 90,000 t/month in the first 10 months of last year, before the shutdown of a Group I plant last November for scheduled maintenance work.

The shutdown was unexpectedly extended to the end of the second quarter of this year. The plant resumed operations early in the third quarter of the year.

But output rose only slightly since then.

Low output in August coincided with a seasonal slowdown in lube demand in Italy and throughout Europe.

Output stayed low in September even as regional lube demand rose from the previous month.

Italy’s base oils demand slumped in September to a 23-month low of 36,050t even with the recovery in lube consumption.

Expectations of lower base oils prices at that time incentivized regional blenders to hold off replenishing stocks.

Uncertainty about lube demand over the coming months incentivized them to procure smaller volumes in a bid to manage stocks even carefully.

The slump in demand in September far outweighed even the muted rise in Italy’s base oils production.

The country’s base oils stocks surged in response to more than 93,000t. The volume rose from less than 65,000t in August to the highest since last November, when the extended plant shutdown began.