Japan’s March base oil output rises

Japan’s base oils production rebounded in March to its highest in more than two years, even as domestic demand stayed weak.

Output of 206,240 kilolitres (182,690t) in March jumped by 26pc from 163,570kl the previous month, government data showed. The volume was the highest since late 2019.

Japan’s base oils output had remained unusually low for the previous seven months to February. The slowdown coincided with shrinking domestic lube consumption and rising base oil imports.

The trend suggested that imported base oil supplies were accounting for a growing share of the country’s base oil requirements.

The imported supplies mostly consist of premium-grade base oils. Japan’s domestic production mostly consists of Group I base oils.

The subsequent surge in base oils production in March coincided with a slowdown in imports. It also coincided with a rise in Japan’s base oil exports to a 14-month high.

The trend suggested that output rose partly to boost shipment volumes to markets like South Korea and Singapore.

South Korea is reliant on imports for most of its Group I supplies. Lower refinery run rates in the country likely added to demand for those supplies.

A rise in Group I base oil supplies in Asia-Pacific boosts the feasibility of moving more surplus volumes to more distant markets like Europe.