Japan’s base oils output extended its fall in December, contrasting with steadier domestic consumption.Lower output and firmer domestic demand cut availability of supplies for export, adding to the tighter availability of Group I base oils in the Asia-Pacific market.Lower output and firmer demand also increased requirements for imports, providing a valuable and growing outlet for premium-grade base oils.The higher imports also coincided with and likely added to the persistently-tight availability of some premium grades such as Group II heavy neutrals.The dynamic and its consequences are likely to continue this year.One consequence was unusually firm Group I brightstock and Group II heavy-grade prices in Asia in 2024.Those prices remained unusually high so far this year.Japan’s base oils output of 169,500 kilolitres (150,000 tonnes) in December edged down from more than 172,000 kilolitres the previous month, government data showed.Output also fell by 12% and for twenty-one months in a row from year-earlier levels.The contraction cut Japan’s total base oils production to 2.07 million kilolitres in 2024, down 13% from 2.38 million kilolitres the previous year.Lower output contrasted with a 1% rise in domestic demand in December and steady consumption of 1.79 million kilolitres in 2024.The disconnect slashed the surplus of output over consumption by more than half in 2024.The smaller surplus in turn cut volumes available for export by more than 35% in 2024.The slump in base oils exports had the largest impact on southeast Asia, with shipments to the region sliding by 70% last year.The drop in supplies forced buyers to turn to other regional sources of Group I base oils such as Singapore and Thailand and to more distant sources such as the Middle East and Europe.It also incentivized buyers to maximise their consumption of premium-grade base oils, whose supply was more readily available in the Asia-Pacific region.Those dynamics are likely to continue through this year.Japan’s lower output and steadier demand also triggered a rise in imports of premium-grade base oils.Total imports rose in December for the tenth time in eleven months from year-earlier levels, pushing up deliveries to more than 220,000 kilolitres in 2024. The volume was up more than 65% from year-earlier levels.The rise in imports from sources like Malaysia contrasted with a drop in China's imports of premium-grade base oils shipments.The move reflected that country’s rising domestic production and self-sufficiency with premium-grade supplies.China's shrinking requirements in turn increased the importance of markets like Japan as a key outlet for Group III supplies..S Korea December base oils exports fall.China’s December base oils output rises.Taiwan’s Dec base oils exports hold firm.Base Oil News stories and analyses also available on the ICIS platform
