China’s base oils output edged up in August as higher production of Group I and Group III base oils cushioned still-lower Group II output.Total paraffinic base oils output of close to 428,000 tonnes in August rose from almost 415,000 tonnes the previous month and by 20% from year-earlier levels, OilChem China data showed.Just the output volume in August almost matched China’s combined base oils production and net imports of almost 433,000 tonnes the same month a year earlier.The higher output in August, along with signs of a pick-up in the country’s imports from unusually low levels in July, raised the prospect of a rise in China’s base oils supply.A rise in supply in the month of August from the previous month would contrast with a drop in supply in August from July in each of the previous three years.Higher supply in August pointed either to steadier demand or to a rise in inventories.A rise in inventories could muffle the impact of a typical seasonal pick-up in lube consumption at the end of the third quarter of the year as blenders tapped existing stocks.Steadier demand by contrast would sustain ongoing requirements for additional base oils supplies.China’s firm domestic Group II base oils prices relative to diesel prices through the second and third quarters of the year pointed to relatively balanced supply-demand fundamentals.The widening premium of China’s domestic Group II prices versus FOB NE Asia cargo prices in recent months made more feasible the arbitrage to import more shipments from the region.The price dynamic pointed to a limited supply surplus, even with higher supply in August.Higher supply and a more limited surplus in turn pointed to steadier demand.China’s base oils output got a boost in August from a pick-up in Group I production to more than 80,000 tonnes, from close to 75,000 tonnes in July.Group I output is set to fall in the coming months following the planned closure of a major Group I unit in the country.Group II base oils output edged up to around 305,000 tonnes in August but held below the 310,000-tonne level for a third month.Output previously held around the 350,000-tonne level during the previous six months to May.Lower Group II output and the timing of the drop in output was the mirror opposite of China’s Group III production.Group III output extended its rise in August to a multi-year high of more than 40,000 tonnes.The volume rose from already-high levels of more than 34,000 tonnes in each of the previous two months and from average levels of less than 17,000 tonnes/month in the year to May..S Korea July base oils exports stay lower.Singapore’s July base oils exports rise.Taiwan’s July base oils exports rise.China’s July base oils imports fall
