Thailand’s August base oils exports fall

Thailand’s base oils exports fell in August to their lowest in more than five years as slumping prices and upcoming plant maintenance boosted the attraction of stock-building.

Base oils exports of 3,640 kilolitres (3,220t) in August fell from more than 16,000kl the previous month to the lowest since early 2017, government data showed.

The country’s base oils exports typically dip to such levels during scheduled plant maintenance work. Export volumes fell this time even without such maintenance work.

The drop in shipments cut Thailand’s total exports to 103,290kl in the first eight months of the year.

The volume was down 19pc from 127,940kl during the same time last year and the lowest for that period in more than eight years.

Base oils exports fell this year in response to unexpectedly weak Chinese demand.

The country’s lower consumption more than countered a drop in exports from other key regional sources like South Korea, Taiwan and Singapore.

China’s slowdown also countered a strong rise in demand in southeast Asian markets like Indonesia and Vietnam.

The slowdown was especially problematic for Thailand’s producers in view of China’s steady demand for its Group I bright stock in recent years. China is structurally short of the product.

But its demand for bright stock also slumped this year.

Thailand exported no base oils to China in August for the fourth time in five months.

The option of moving shipments to other outlets was increasingly unattractive in view of a slump in regional base oils prices in July and August.

The trend pushed Group I prices to a steep discount to gasoil prices.

The discount to diesel incentivized refiners to cut run rates or to produce more middle distillates instead.

Thailand’s producers also had the option of holding back supplies to build stocks ahead of scheduled plant maintenance work during the fourth quarter of the year.