Japan’s Dec base oils exports improve

Japan’s base oils exports rose in December but were still last year's third-lowest volume amid a sustained slowdown in shipments since the end of the third quarter.

The lower volumes coincided with the permanent closure of one of Japan’s Group I base oils plants at end-September. Another plant is set to be closed later this year.

The drop in production capacity, combined with a heavier round of plant maintenance in Japan this year, raised the prospect of an extension of the slowdown in exports over the coming months.

Any such slowdown would coincide with a seasonal rise in lube demand in the Asia-Pacific region in the first and second quarters of the year.

Demand in China is also expected to get a further boost from a pick-up in economic activity following the scrapping of its zero-Covid policy.

Japan’s base oils exports of 74,780 kilolitres (66,240t) in December rose from 65,250kl the previous month, government data showed.

The volume was the third lowest in 2022. The lowest volumes had been in September and November.

Japan’s base oils exports surged in 2022 even with the drop in shipments during the final months of the year.

Exports of 1.01mn kl rose by 8pc from 936,000kl in 2021 to a four-year high.

Exports rose amid an unusually light round of plant maintenance last year, combined with high refinery run rates.

Japanese lube blenders’ growing consumption of premium-grade base oils and waning demand for Group I base oils also added to domestic refiners’ growing surplus of Group I supplies.

Singapore was a key beneficiary of the surge in shipments.

Japan’s exports of 336,000kl to the island-state in 2022 rose by 29pc from 2021 to a six-year high.

Those shipments also already trended lower during the final months of 2022.

A continuation of the slowdown would force buyers in southeast Asia to seek alternative supply sources of Group I base oils, or where possible, to switch to using Group II base oils.