UK’s Oct base oils supply lags demand

The UK’s base oils supply lagged demand in October for the second time in three months amid a slump in domestic output.

Total supply of less than 35,000t in October fell from more than 50,000t in each of the previous three months to the lowest in more than a year, government data showed.

Supply fell as domestic base oils output slumped to around 2,000t in October.

The volume was the lowest in nineteen months and down from typical levels of around 24,000 t/month over the past year.

The drop in production levels contrasted with a rise in Italy’s domestic base oils output.

The contrasting trends curbed the pace of any supply-build in Europe during the final quarter of the year.

The UK's demand, or domestic consumption and exports combined, was steady at around 44,000t in October.

Exports got support from a rise in flows to non-European outlets like Africa.

The shipments continued to boost the share of the UK’s supplies moving to markets outside Europe.

That trend in turn kept tighter the volume of Group I base oils supplies in the European market.

Tighter supplies and firmer Group I prices relative to other base oils grades increased the incentive for blenders to boost consumption of premium-grade base oils instead.

The UK's steady base oils demand and lower supply left a shortfall of more than 9,000t in October.

The shortfall slowed any build-up of surplus supplies at a time of year when regional demand faced a seasonal slowdown.