Japan’s base oils supply lagged demand in June as a rebound in domestic consumption contrasted with persistently-weak output of the lubricants feedstock.The shortfall mirrored a similar dynamic in South Korea, which also faced lower output and an unusually strong rise in domestic demand in June.Tighter supply and firmer demand in two of Asia’s largest markets raised the prospect of leaving fundamentals tighter than expected throughout the region heading into the third quarter of the year.Japan’s total base oils supply, or output and imports combined, came to 171,800 kilolitres (152,000 tonnes) in June, government data showed.Supply fell for a fifth straight month from year-earlier levels to the lowest since February.Supply stayed low as plant-maintenance work compounded Japan’s structurally-lower base oils production capacity, triggering a sustained fall in output throughout most of the year.Japan’s total base oils demand, or domestic consumption and exports combined, also stayed low at less than 173,000 kilolitres in June. The volume fell for the seventh time in eight months from year-earlier levels.Lower total demand masked a 3% rise in the country’s domestic consumption to an eleven-month high of close to 154,000 kilolitres..Japan’s higher domestic demand coincided with signs of a pick-up in the country’s economic activity.Industrial production rose year-on-year in June at its fastest pace in more than two years and is expected to extend its rise in July and August.The increase in June included a rise in motor-vehicle output, following a contraction the previous month.Industrial activity could get a further boost following the recent trade and tariffs agreement between the US and Japan.Concern about the size and cost of the tariffs, and its impact on Japan’s automobile industry especially, had weighed on market sentiment in recent months.Japan’s stronger domestic base oils demand and lower output slashed the volume of supplies available for export.Shipments to overseas markets duly slid in June to their lowest level in more than a decade.The drop in exports coincided with a sharp slowdown in Group I shipments from the Middle East in June and preceded the shutdown of a key Group I base oils unit in Thailand in July.The lower supply from key sources of Group I base oils complicated regional buyers’ ability to secure sufficient volumes of those base oils..S Korea’s June base oils output falls.China’s June base oils output falls.India June base oils supply lags demand.Base Oil News stories and analyses also available on the ICIS platform