Thailand’s May base oil exports rise

Thailand’s base oil exports rose in May to their highest this year even amid strong domestic demand and muted buying interest in more regular outlets in the Asia-Pacific region.

Base oil exports of 16,840 kilolitres (14,920t) in May rose from 11,440kl the previous month to the highest since December, government data showed.

Total exports of 74,970kl in the first five months of the year were up slightly from 74,120kl during the same period last year.

Thailand’s producers had sought to maximise production and exports in first-half 2021 to tap unusually strong demand, tight supply and high prices in the Asia-Pacific region.

Supply-demand fundamentals have been more balanced so far this year.

Regional base oil prices reflected that dynamic, with values much lower than year-earlier levels, especially relative to crude and diesel.

Thailand’s base oil exports have held firm this year even with those weaker fundamentals and prices.

The trend mirrored a similar pattern in Japan, suggesting a larger supply-demand imbalance for Group I base oils. Moves to redirect surplus supplies to regional markets have compounded that imbalance and capped the rise in Group I prices.

Unusually weak Chinese demand has added to that pressure. Thailand’s base oil exports to China have been sporadic so far this year.

Thailand has instead attracted more interest from more distant markets, where prices were at more elevated levels as they reflected the tight availability in Europe.

A 3,360kl cargo was lined up to move from Thailand to the UAE in May. The shipment was the largest in 20 months.

Thailand’s base oil exports to the UAE have previously been rare. Total exports to the region came to less than 1,500kl in 2021.

The May shipment was the second such large cargo in 2022 and boosted total exports to the UAE to 5,600kl so far this year.