Japan’s April base oils output eases

Japan’s base oils and lube output stayed unusually high in April for a second month, even as total refinery run rates fell.

Base oils and lube output of 193,560 kilolitres (171,460t) in April edged down from a 35-month high of 206,240kl in March, government data showed.

The April volume was still the second highest in the past 13 months.

Japan’s base oils output rebounded in March and April after holding unusually low during the previous 11 months.

The rise in output has coincided with surging crude and diesel prices that have incentivized refiners to boost production of middle distillates.

By contrast, regional base oil prices have struggled to keep pace with the rise in crude and diesel prices. The price weakness incentivizes refiners to cut base oil production.

Refiners in some markets have maintained steady base oils output partly because margins have remained firm relative to diesel.

In India, steady retail diesel prices have weakened relative to rising base oil prices.

Similarly, any refiners that linked domestic base oil prices with crude oil would lock in a steady margin.

Japan’s base oil production rose in April even as the country’s total refined products output fell to a nine-month low.

The trend boosted base oils output as a share of total refined products output to a nine-month high of 1.70pc. It had typically been less than 1.40pc over the past year.