India’s July base oils output stays low

India’s base oils output stayed lower than usual in July amid ongoing plant maintenance work.

Output of 79,380t in July was down 10t from the previous month, government data showed.

Before June, monthly output had exceeded the 100,000t level for six straight months.

Those high production levels outweighed the slowdown in June and July, boosting base oils output to 708,000t in the first seven months of the year.

The volume was up 4pc from 680,000t during the same period last year.

The high production levels helped to meet strong domestic lube demand and to tap firm base oils prices relative to the country’s diesel prices.

The base oils prices reflected the surge in Asia-Pacific prices during the second quarter of the year.

The rise in India’s retail diesel prices was more muted. Prices have been unchanged since late May.

The strong base oils prices relative to diesel contrasted with other markets like Thailand, where low margins incentivized producers to cut base oils production.

India’s base oils output slowed in June and July because of scheduled plant maintenance work.

The lower production coincided with a seasonal slowdown in lube consumption during the monsoon season. India’s lube demand fell in July to a one-year low.

Rising imports of Group II and Group III base oils in July also helped to cover for the drop in domestic supply.

India’s base oils production likely rose in August following the completion of the maintenance work.

The availability of additional base oils supplies and a steady flow of imports leaves India’s buyers well-positioned to build sufficient stocks ahead of the peak demand season in the fourth quarter of the year.