Japan’s Nov base oils/lube output rises

Japan’s base oils and lube output held firm in November, balancing out a slowdown in production in southeast Asia.

The firm output extended a trend of higher production throughout most of last year, despite the closure of a Group I plant at the end of the third quarter.

The high output partly reflected an unusually light round of base oils plant maintenance work during the year.

Japan’s refinery run rates and output were also higher than usual as producers sought to benefit from high middle distillates prices relative to crude.

The country's base oils output is likely to be lower in 2023 because of a heavier round of plant maintenance work. Another Group I base oils unit is also set to be closed permanently later in the year.

Base oils and lube output of 216,170 kilolitres (191,490t) in November rose from 191,590kl the previous month and by 49pc from year-earlier levels, government data showed.

The rise in output for a ninth month lifted total production to 2.32mn kl in the first eleven months of the year. The volume rose 25pc from 1.85mn kl during the same period in 2021 to a nine-year high.

Japan’s high base oils output during the year compounded the Asia-Pacific region’s supply overhang that kept downward pressure on prices.

The higher output in November followed plant maintenance work the previous month.

It also coincided with lower output and exports from several key suppliers in southeast Asia in October and November.

Regional Group I base oils prices firmed relative to Group II prices and relative to crude and diesel prices during the fourth quarter of the year, reflecting their more balanced fundamentals.