apan’s base oils supply fell to a three-month low in November amid an ongoing slowdown in domestic production.
Base oils output of 186,220 kilolitres (165,000t) in November edged down from October and fell for an eighth month from year-earlier levels, government data showed.
The sustained slowdown cut total output to 2.18mn kl in the first eleven months of the year, down 6pc from 2.32mn kl during the same period the previous year.
Output fell throughout the year because of a combination of scheduled plant maintenance work and lower production capacity following the closure of a Group I plant in second-half 2022.
The closure of a second Group I plant in the fourth quarter of 2023 cut capacity further and raised the prospect of extending the drop in output into this year.
The drop in Japan’s base oils production and surplus supply for overseas markets increased the Asia-Pacific region’s reliance on Thailand and Singapore to cover its Group I base oils requirements.
The tighter supply fundamentals supported firmer Group I base oils prices in the region relative to crude and diesel and relative to Group II prices during the fourth quarter of 2023.
The prospect of Group I supply fundamentals staying tighter early this year was likely to support an extension of those dynamics over the coming weeks.
Japan’s base oils imports edged down in November from the previous month as a dip in shipments from Qatar countered a recovery in supplies from South Korea.
The drop in imports and output cut Japan’s total base oils supply to 196,700kl in November. The volume fell from typical levels of more than 210,000 kl/month over the past year.
