Japan’s base oils demand fell in September for the seventh time in eight months, speeding up a build-up of surplus supply.
Consumption of 117,000 kilolitres (103,000 tonnes) in September fell by 17% from year-earlier levels, government data showed.
A seasonal boost lifted demand by 9% from August. But the size of the month-on-month increase was smaller than usual.
Japan’s lower demand contrasted with a recovery in domestic base oils output.
Base oils exports stayed low even with the widening gap between demand and output.
Japan’s total demand duly lagged supply in September by the largest volume in more than three years.
The rebound in Japan’s surplus supply coincided with an ongoing recovery in Asia’s base oils output.
Any extension of Japan’s demand weakness to other countries would magnify the impact of the rise in regional supply and subsequent need to move more of those shipments to markets outside the region.
Any extension of Japan’s demand weakness through the fourth quarter of the year, combined with higher domestic output, could also increase the volume of surplus Group I shipments to clear through other markets.
