Canada’s base oils output stayed unusually low in July for a third month, contrasting with increasingly higher refinery run-rates for motor fuels.
The country’s base oils output of 6,840mᶟ (6,060t) in July fell from an already low 8,650mᶟ the previous month to the second lowest in 10 months.
Output slumped from year-earlier levels for a third straight month, cutting supply to 171,660mᶟ in the first seven months of the year.
The volume was down more than 40pc from 293,410mᶟ during the same period last year.
The drop in production to less than 9,000 mᶟ/month in each of the last three months to July contrasted with more typical levels of close to 40,000 mᶟ/month in 2021.
The drop in base oils production mirrored a similar trend in other markets where unusually strong diesel prices incentivized refiners to maximise production of middle distillates.
The surge in diesel prices has outpaced the rise in base oils prices so far this year. Group I and Group II base oils prices have also outpaced the rise in Group III prices.
Canada is home to a major Group III base oils unit.
The country’s base oils output extended its slump in July even as refinery production rose to its second-highest level this year.
The increase in production instead reflected higher output of diesel and jet fuel.
Middle distillates output rose in July to its highest since the beginning of 2020 and accounted for the highest share of refined products output in more than three years.
The impact of lower base oils output was muted.
The US is a key export market for Group III base oils from Canada. The country has been importing increasingly large volumes of Group III base oils from Mideast Gulf and Asia-Pacific so far this year.
