Thailand’s June base oil exports slump

Thailand’s base oils exports fell to a five-year low in June amid weak regional demand, squeezed margins and signs of lower supply.

Base oils exports of 7,980 kilolitres (7,070t) in June fell by more than half from 16,840kl the previous month, government data showed.

The volume was down from typical levels of more than 18,000 kl/month and the lowest since early 2017.

The drop in supplies cut total base oils exports to 82,960kl in the first half of the year. The volume was down 16pc from the same period last year and the lowest for that period since 2017.

The drop in base oils exports coincided with increasingly weak regional Group I base oils prices relative to crude and diesel. Asia-Pacific prices fell to a steep discount to diesel prices in the month of June.

The trend coincided with unusually strong diesel prices relative to crude and incentivized refiners to produce more of the motor fuel instead.

The size of the fall in base oils exports suggested a larger change in production than run-cuts, such as scheduled or unexpected plant maintenance work.

Slack demand in China especially curbed any impact of the drop in supplies.

There were no base oils exports from Thailand to China in June for the second time in three months.

Exports to Singapore were the lowest in five months.

Muted demand in southeast Asia boosted interest in moving the limited volumes to other outlets.

The base oils exports included a 2,190kl shipment to India. The cargo was the first to that market in eight months.