Italy’s base oils output fell to a six-month low in December, partially cushioning the impact of a regionwide slowdown in demand.The European market faced a persistent surplus of base oils supplies late last year and early this year as slowing economic activity compounded a seasonal drop in demand..Italy's December lube demand falls.The size of the surplus would have been even larger but for a fall in base oils production in markets like Italy.Domestic demand is likely to get a seasonal boost in the coming weeks as blenders replenish stocks. The move would follow the removal of most of the country’s surplus supplies to outlets like West Africa and Mideast Gulf in recent weeks.Domestic base oils production would need to rise to meet the pick-up in demand.Base oils output of little more than 59,000t in December fell from close to 60,500t the previous month, government data showed. The volume was the lowest since June 2022..Base oils output had been unusually low in first-half 2022 because of the unplanned and prolonged shutdown of a key Group I base oils plant in the country.Base oils output fell to similarly low levels in December despite the restart of the base oils plant in the third quarter of the year.The lower output instead suggested other factors such as refinery run-rates.The drop in output followed a slump in Europe’s Group I base oils prices during the final months of 2022 and early this year.The lower prices contrasted with firm diesel prices that boosted the attraction of producing more middle distillates instead.Italy’s base oils production accounted for 0.96pc of the country’s total oil products output in December. The share was down from 1.03pc the previous month and 1.25pc in October.Output had averaged more than 1.4pc of total production in 2021.Italy’s gasoil output by contrast held at more than 43pc of total output in December for the third time in four months. Gasoil output had averaged less than 42pc of the total in 2021.Surplus supply pressured European base oils prices late last year and early this year even with the drop in output.The surplus could have been even bigger. Italy's base oils output fell from typical levels of at least 90,000 t/month.Italy’s total base oils output of 672,930t in 2022 fell by a third from 1.02mn t the previous year, reflecting the impact of the plant shutdown and run-cuts. .Europe’s Nov base oils supply falls
