Italy’s August base oils output improves

Italy’s base oils output was steady in August after rising from unusually low levels during the first half of the year.

Output of 62,340t in August edged down from 64,360t the previous month, government data showed. The output levels during those two months were the highest since October 2021.

Italy’s base oils output had averaged less than 47,000 t/month in first-half 2022, down from more than 97,000 t/month during the same period last year.

Italy’s base oils production had slumped since November after a fire during planned maintenance work at a Group I base oils unit that month.

Subsequent repair work delayed the restart of the unit until July.

The unexpected and prolonged shutdown of the base oils unit slashed Italy’s base oils output during the intervening months.

The drop in production compounded Europe’s unexpectedly tight base oils supply during the first half of the year.

Base oils prices surged in response to the tight supply.

The recovery in Italy’s base oils output from the start of the third quarter of the year coincided with a seasonal slowdown in Europe’s base oils and lube demand.

A regionwide economic slowdown compounded the drop in demand.

European base oils prices fell sharply in recent months in response to rising surplus supply.

Even with the restart of the base oils unit, Italy’s base oils output in July and August remained much lower than usual.

A repercussion of the relatively slow recovery in output was likely to be a similarly slow rise in Italy’s base oils exports.

These had fallen for ten straight months to July, cutting total shipments by some 40pc in the first seven months of the year.