China’s base oils output stayed unusually low in January even as it edged up to a five-month high.The muted rise in output mirrored domestic blenders’ preference to hold off replenishing stocks until after the lunar new year holidays.The moves left supply low at a time of year when demand typically rises ahead of the spring oil-change season.The seasonal rise in demand is likely to get a further boost from a pick-up in the pace of China’s economic growth following the scrapping of its zero-Covid policy late last year.The country’s manufacturing and services activity already showing signs of reviving in January.The combination of low base oils production, combined with blenders’ low stocks and a firmer-than-usual rise in demand raised the prospect of tighter availability over the coming months until supply responds in kind.China’s output of Group I, Group II and Group III base oils rose to little more than 330,000t in January, according to OilChem China..The volume rose from less than 321,500t the previous month to the highest since last August amid a pick-up in output of Group II base oils.The volume was only slightly higher than average output of around 315,000 t/month in the last four months of last year. It was down 27pc from more than 453,000t in January 2022.A typical slowdown in activity during the lunar new year holidays and uncertainty about the impact of a wave of Covid-19 infections in January deterred refiners from raising base oils output.Sliding domestic base oils prices relative to diesel also incentivized refiners to produce more middle distillates instead.Low output followed a drop in China’s base oils imports in December, despite a rebound in supplies from Taiwan.The pick-up in shipments from Taiwan was unlikely to repeat itself in January, with a large volume of supplies moving to southeast Asia instead.China’s low base oils output, low imports and low stocks now faced an upcoming rise in domestic demand as economic activity gathers pace over the coming weeks after the lunar new year holidays..Global base oils - week of Jan 30: Cargo flows
China’s base oils output stayed unusually low in January even as it edged up to a five-month high.The muted rise in output mirrored domestic blenders’ preference to hold off replenishing stocks until after the lunar new year holidays.The moves left supply low at a time of year when demand typically rises ahead of the spring oil-change season.The seasonal rise in demand is likely to get a further boost from a pick-up in the pace of China’s economic growth following the scrapping of its zero-Covid policy late last year.The country’s manufacturing and services activity already showing signs of reviving in January.The combination of low base oils production, combined with blenders’ low stocks and a firmer-than-usual rise in demand raised the prospect of tighter availability over the coming months until supply responds in kind.China’s output of Group I, Group II and Group III base oils rose to little more than 330,000t in January, according to OilChem China..The volume rose from less than 321,500t the previous month to the highest since last August amid a pick-up in output of Group II base oils.The volume was only slightly higher than average output of around 315,000 t/month in the last four months of last year. It was down 27pc from more than 453,000t in January 2022.A typical slowdown in activity during the lunar new year holidays and uncertainty about the impact of a wave of Covid-19 infections in January deterred refiners from raising base oils output.Sliding domestic base oils prices relative to diesel also incentivized refiners to produce more middle distillates instead.Low output followed a drop in China’s base oils imports in December, despite a rebound in supplies from Taiwan.The pick-up in shipments from Taiwan was unlikely to repeat itself in January, with a large volume of supplies moving to southeast Asia instead.China’s low base oils output, low imports and low stocks now faced an upcoming rise in domestic demand as economic activity gathers pace over the coming weeks after the lunar new year holidays..Global base oils - week of Jan 30: Cargo flows
