India’s June base oils output falls

India’s base oils output fell in June to its lowest in a year, reflecting the impact of scheduled plant maintenance work.

Base oils output of 79,400t in June fell from 104,360t the previous month, government data showed.

Even with the drop in production, output of 628,000t in the first half of the year was still up 10pc from 573,000t during the same period last year.

The drop in production coincided with a slowdown in India’s base oils imports.

The impact was muted as a seasonal slowdown in demand gave buyers the option to hold back at a time when they deemed prices to be too high.

India’s base oils output had held above the 104,000t level in seven of the last eight months to May. Output had held firm even with strong diesel demand in the country.

Strong fuel demand mirrored a similar trend in other countries. Refiners in some of those markets raised middle distillates output as a share of total production in response to the strong demand.

High diesel prices in those markets added to the incentivize to implement such a move.

Retail diesel prices in India have lagged this year’s rise in feedstock crude prices. Base oils prices have risen more than diesel prices.

Unlike other markets, the trend incentivized Indian refiners to maintain or increase base oils production.

The drop in base oils output in June was the first significant dip in a year. Output likely remained lower in July because of the plant maintenance work. It is likely to recover in August.