Thailand’s Nov base oil output stays low

Thailand’s base oils output in December stayed close to its lowest in more than a decade amid protracted maintenance work at both the country’s base oils plants.

The low output added to signs of a smaller base oils supply surplus in the Asia-Pacific region in the fourth quarter of the year.

The smaller surplus left regional base oils producers better positioned at the start of the new year to maintain rather than cut price levels that they were targeting.

Thailand’s base oils output of 25,570 kilolitres (22,650t) in November rose from less than 20,500kl the previous month, government data showed.

The October volume had been the lowest in more than a decade.

The November volume was the second lowest.

Output had previously averaged more than 56,000 kl/month in the year to September.

Output typically falls when plant maintenance work takes place in Thailand.

The slump in production this time reflected the simultaneous shutdowns of both the country’s two plants.

Previously the shutdowns tended to be at different times.

The extended period of the shutdowns exacerbated their impact, with output staying unusually low for two months.

Output at Thai Lube’s 260,000 t/yr Group I plant fell to less than 12,200kl in November, from typical levels of more than 22,000 kl/month.

Output of less than 4,700kl at IRPC’s 320,000 t/yr Group I plant was down from typical levels of closer to 30,000 kl/month.

Regional Group I base oils prices were steady or lower in the fourth quarter of the year, even with the drop in output from Thailand.  

But the premium of Group I bright stock over heavy neutrals rose sharply during that period.

Thailand is a key source of bright stock for regional buyers like China and Singapore.

The discount of Group I prices to Group II base oils prices also narrowed sharply in the fourth quarter of the year. The trend reflected their tighter fundamentals compared with Group II base oils.