Thailand’s Group I base oils supply held firm in June for a third month, boosting stocks ahead of the shutdown of one of the country’s key base oils units.The firmer supplies raised the prospect of cushioning the impact of the plant-shutdown in July, especially in the country’s domestic market.The firmer volumes could provide less support for other markets because of tighter Group I supply from other key sources such as Japan and the Middle East.Thailand’s Group I base oils output of 56,800 kilolitres (55,400 tonnes) in June was close to typical levels over the past year, government data showed.The volume likely fell in July because of the start of a 45-day shutdown of one of the country’s two Group I base oils units.The unit accounts for around 37% of Thailand’s base oils output and a larger share of its domestic base oils sales.Thailand’s other base oils unit is more focused on overseas markets and accounted for an unusually large share of the country’s higher base oils exports in June.Thailand’s total net Group I base oils supply, or output less domestic and overseas shipments, slipped to a three-month low of less than 20,000 kilolitres in June..The lower volume reflected the pick-up in exports in June but was still the third-highest this year and down from unusually high levels in April and May.Those higher volumes already enabled a round of stock-building ahead of the plant-shutdown in the third quarter of the year.A typical seasonal slowdown in domestic lube demand in the month of July raised the prospect of stretching those stocks out for longer.Sufficient supply to cover domestic requirements, and a seasonal slowdown in demand in the rest of Asia, would typically further cushion the impact of the plant-shutdown.Japan’s lower base oils exports and a dip in shipments from the Middle East instead magnified the drop in supplies from Thailand and the squeeze on regional availability of Group I base oils.Asia’s Group I heavy-neutrals cargo prices rose strongly relative to Group II heavy grades since early-July, reflecting the tighter Group I fundamentals..Thailand’s June lube demand steadies.Japan’s June base oils supply lags demand.Base Oil News stories and analysis also available on ICIS platform
