Japan’s Feb base oils output stays low

Japan’s base oils and lube output stayed lower than usual in February as rising diesel and feedstock prices squeezed margins.

Base oils and lube output of 163,570 kilolitres (144,890t) in February edged up from 163,010kl the previous month and from 162,540kl in December to a seven-month high, government data showed.

The higher output level reflected more Japanese refiners’ unusually low production of base oils and lubricants during second-half 2021.

Output had averaged more than 175,000 kl/month during the first half of that year.

Output has remained lower than usual even with scant plant maintenance work lined up for the first half of this year. Several plants typically undergo maintenance work during this period.

Production levels have also remained low despite Japanese refinery run rates holding above the 80pc level in the three months to February.

Run rates had been much lower than usual during the first 11 months of last year.

Steady base oils production at this lower level limits the volume of surplus supplies available for export.

That surplus is set to shrink even more when a Group I base oil unit in Japan is permanently closed later this year.