UK’s base oils output halts in November

The UK’s base oils supply stayed unusually low in November because of a halt in domestic output for the first time in four years.

A surge in imports and slump in exports cushioned the drop in supply.

The pause in output coincided with a sharp fall in Group I base oils production in Italy in November.

The drop in supply in UK and Italy raised the prospect of limiting the size of a build-up of surplus supplies in Europe at year-end, when demand faced a seasonal slowdown.

Europe’s base oils exports to markets outside the region already fell in November to a six-month low.

The drop in shipments coincided with unworkable arbitrage opportunities to many key outlets.

Lower base oils output in markets like UK and Italy suggested that a drop in surplus supply was another factor impacting the volume of shipments for export.

The UK produced no base oils in November, government data showed.

The pause followed a slump in output to close to 2,000t the previous month.

The country’s output was typically around 24,000 t/month over the previous twelve months.

The drop in output tightened availability of supply for the domestic market.

The UK’s base oils imports surged to a six-month high in November, helping to ease any tightness.

The drop in output also cut base oils supplies available for export.

These fell to a nearly-four-year-low of less than 9,000t in November.

The fall in exports included a slump in shipments to Africa to the lowest since 2019.