Asia’s Sept base oils supply edges up

Base oils supply in Asia-Pacific edged up to a five-month high in September as rising output in Japan and India countered a drop in production in South Korea.

Steady supply contrasted with a surge in the region’s base oils exports to a 10-month high as producers sought to clear surplus volumes from the region.

Base oils supply of around 950,000t in September rose by less than 10,000t from the previous month to the highest since April.

Supply mostly held in a 925,000-950,000 t/month range since May.

The volume was derived from seven key suppliers in the Asia-Pacific region, excluding China and Indonesia.

The steady supply contrasted with more volatile and lower base oils output in Europe and the Americas markets so far this year.

Supplies of 2.82mn t in the third quarter of the year fell by 2pc from 2.88mn t during the previous three months.

The drop in supply was smaller than the seasonal fall in demand.

Regional base oils prices fell in response to the growing surplus and to make feasible the arbitrage to markets like Europe and Latin America.

The surge in Asia-Pacific base oils exports in September helped to clear much of that surplus.

Base oils supply less exports fell to less than 690,000t in the third quarter of the year, down from more than 830,000t during the previous three months.

The trend reflected the rise in exports during that period as they balanced out the drop in regional demand.

The surge in shipments in September left producers with more balanced supplies at the start of the fourth quarter.

Including China, total Asia-Pacific supply of around 1.25mn t in September remained close to its lowest in years.

The slump in domestic demand in China curbed much of the impact of the drop in the country’s supply.

That dynamic changed in the fourth quarter when firmer demand outpaced low supply and increased the need for regional shipments to make up the difference.