Japan’s August base oils output falls

Japan’s base oils and lube output fell in August to a three-month low even as the country’s total refined products output rebounded.

Base oils output is likely to fall further over the coming months because of scheduled plant maintenance work as well as the planned closure of a Group I base oils unit in the country.

Output of 175,300 kilolitres (155,280t) in August fell from 194,450kl the previous month, government data showed.

Production still rose for a fifth straight month from year-earlier levels.

The trend boosted total output to 1.47mn kl in the first eight months of the year. The volume was up 17pc from the same period last year.

The rise in output added to a region-wide supply surplus that kept sustained pressure on Asia-Pacific base oils prices throughout the year.

The higher volumes also supported a surge in the country’s base oils exports to markets like Singapore and Thailand.

The slowdown in base oils output in August partly reflected the impact of plant maintenance work.

Domestic refiners’ scheduled maintenance work had been unusually light in the first half of the year.

The lower output also followed a sharp fall in outright base oils prices from the end of the second quarter of the year.

The lower prices compounded the pressure on base oils margins and added to refiners’ incentive to produce more middle distillates instead.

Japan’s diesel and jet fuel output, and their share of refinery output, both rose in August to the highest in more than two years.

Base oils’ 1.32pc share of total refined products output in August fell from more than 1.6pc in July to a six-month low.

Base oils output is likely to fall further over the coming months because of more plant maintenance work.

Eneos’ 225,000 t/yr Group I base oil plant at Negishi was also set to be closed by the end of the third quarter.