Thailand’s base oils output recovered to more typical levels in August following the completion of maintenance work on a key Group I base oils plant.Base oils output of 55,000 kilolitres (49,000 tonnes) in August recovered from less than 33,500 kilolitres the previous month, government data showed..Output fell in July to the lowest since late-2022 because of the shutdown of the Group I unit from the start of that month.Output recovered in August following completion of the maintenance work.The recovery in output was unusually sharp, with the August volume close to typical levels of around 56,500 kilolitres/month in the year to June.The speed of the recovery in output in August suggested that production returned to normal early that month following the maintenance work..The sharp recovery in output contrasted with weak demand and high base oils import volumes that added to the country’s supply.The surplus of Thailand’s base oils supply over demand duly rose in August to a three-year high. Most of that volume consisted of Group I base oils.The large pick-up in surplus Group I supply reversed recent tightness and put immediate pressure on Asia’s Group I base oils prices relative to other grades.The discount of FOB Asia Group I SN 500 prices to Group II N500 prices shrank in the two months to end-August to the narrowest level in more than a year.The narrower price-discount during that period reflected the tight availability of Group I heavy-neutrals and rising surplus volumes of Group II supplies.The trend then went into reverse from end-August, with the Group I price-discount widening steadily despite the ongoing surplus of Group II heavy grades.The pick-up in surplus Group I base oils supply put additional pressure on prices to move to levels that facilitated the removal of shipments from the region.Firm Group I heavy-grade prices in the Middle East already lifted prices in that region to a small premium to FOB Asia prices in first-half August for the first time in more than a year.The CFR UAE SN 500 price-premium to FOB Asia prices then surged over the following weeks to the highest since September 2023.The widening premium made increasingly feasible the arbitrage to move shipments from Asia to the Middle East..Thailand’s August lube demand falls.Thailand’s July base oils output falls.S Korea's August base oils output rises.Base Oil News stories and analysis also available on ICIS platform
