Base oils supply in Asia-Pacific held steady in July at its lowest level in more than a year.The volume was still too large for the region to absorb, prompting ongoing arbitrage flows to markets like Latin America.Base oils supply of around 885,000t in July was almost the same as in June and the lowest in 13 months. It fell 7pc from year-earlier levels. The year-on-year drop was the first in 16 months..The volume was derived from seven key suppliers in the Asia-Pacific region, excluding China and Indonesia.Including China, base oils supply fell in July from year-earlier levels for a third straight month.Total supply of 6.46mn t in the first seven months of the year was up 10pc from 5.85mn t during the same period last year.Including China, the total came to just over 9.10mn t in the first seven months of the year. The volume was down 6pc from 9.73mn t during the same period a year earlier.The impact of the rise in supplies outside China outweighed the slump in domestic base oils production within the country.The rise in supplies coincided with unexpectedly weak Chinese demand. The country’s demand for overseas supplies slumped even with the drop in its own domestic base oils production.Even that lower production volume was too high.China moved growing volumes into the export market in the third quarter to clear surplus supplies and tap higher overseas prices..China's August base oils exports surge.Weak Chinese demand forced regional producers to carry on redirecting China-bound shipments to other markets instead.The persistent surplus kept pressure on regional base oils prices to keep open the arbitrage to outlets like Latin America and Europe.Firm demand in those markets had facilitated a steady flow of arbitrage shipments in the first half of the year.Slowing demand in those markets raises the prospect of complicating such shipments over the coming months.The pressure on prices already squeezed regional base oils margins and incentivized refiners to cut run rates.The incentive to lower run rates is likely to continue unless Chinese demand revives..Asia’s June base oils supply falls