Japan’s July base oils exports hold firm

Japan’s base oils exports stayed unusually high in July, sustaining a surge in shipments to southeast Asia.

Base oils exports of 91,800 kilolitres (81,320t) in July edged up from 90,350kl the previous month, government data showed.

The volume outpaced typical exports of less than 80,000 kl/month over the past year.

Total exports of 637,780kl in the first seven months of the year rose 2pc from 622,550kl during the same period last year to a four-year high.

Japan’s base oils exports rose even amid strong domestic demand and weak overseas prices compared with crude and diesel prices.

But the country’s base oils production also remained unusually high since March amid a sustained rise in Japan’s refinery run rates.

The high run rates coincided with and partly reflected the impact of a light round of plant maintenance work and a relative lack of unexpected production issues so far this year.

That dynamic is set to change over the coming months when some base oils plant maintenance is scheduled to take place. A Group I base oils plant is also scheduled to be closed permanently by the end of the third quarter.

The rise in exports added to a regional supply overhang that kept pressure on Asia-Pacific base oils prices.

Persistently weak Chinese demand compounded the impact of the surplus supplies by removing a key outlet for the shipments.

Japan’s base oils exports of 66,500kl to China in the first seven months of the year were down 25pc from 88,310kl during the same period last year.

A swathe of shipments instead moved to southeast Asia, and especially to Singapore.

Lube demand in the region has risen strongly this year as the relaxation of pandemic-related restrictions added to a pick-up in economic growth.

Exports of 222,830kl to Singapore in the first seven months of the year were up 29pc from 172,550kl during the same period last year.