Asia’s March base oils supply rises

Asia-Pacific base oils supply rebounded in March to its highest level in at least five years amid a rise in output from almost all the key producers in the region.

Total supply of more than 1mn t in March rose by more than 10pc from close to 900,000 t/yr the previous month.

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

The higher output accounted for more than 85pc of the suppliers’ production capacity, up from less than 80pc the previous month.

Base oils production rose in March even as base oil values fell to unusually weak levels relative to crude and diesel. The trend likely reflects a lag in the impact of those prices on base oils production.

The sustained weakness of regional base oil prices in recent months coincided with scheduled plant maintenance work in the region in April and May and lower refinery run rates in China.

The higher Asia-Pacific base oils output during the first quarter of the year highlighted the region’s healthier supply balance relative to the US and to the Europe market especially.

The higher output has attracted interest from buyers that have typically sought supplies from the US and Europe.

Any drop in availability of surplus volumes from Asia-Pacific would complicate those buyers’ ability to cover requirements amid the tighter availability of supplies from the US and European markets.