China’s base oils output stayed in a narrow range in May even as a less feasible arbitrage increased buyers' reliance on domestic supplies.Steady output and a less workable arbitrage pointed to muted domestic demand. Total paraffinic base oils output held at around 439,000 tonnes in May, OilChem China data showed.The volume was at a similar level during two of the previous three months.China’s base oils production in May was up at least 13% from output levels during the same month in 2022 and 2023, but still down more than 20% down from May 2021.The lower supply pointed to more muted demand since then.Output held steady in May even as the country’s domestic Group II base oils prices lagged higher FOB NE Asia cargo prices during the second quarter.The diverging price trend made the arbitrage even harder to work.The closed arbitrage incentivized regional refiners to move more shipments to other markets instead.The closed arbitrage also increased domestic buyers’ reliance on supplies from local refiners.Any price support from such moves was limited.China’s domestic Group II prices instead weakened relative to Shandong diesel prices in May.The shrinking premium to diesel pointed to slack demand and boosted the incentive for refiners to maintain or trim base oils output.Any such move to cut output would coincide with a time of year when demand typically faces a seasonal slowdown during the summer months.Several Group II base oils units in China were scheduled to undergo maintenance work in May and June.China’s Group I base oils output recovered to around 75,000 tonnes in May, from an eight-month low of less than 70,000 tonnes in April.Output fell in April because of the shutdown of a major Group I base oils unit for maintenance work.Output remained lower than usual in May even after the base oils unit resumed operations early that month.China’s domestic Group I base oils prices remained unusually firm relative to Group II prices in May, reflecting the grade’s still-tighter supply dynamics..China April base oils imports fall .China’s April base oils output falls
China’s base oils output stayed in a narrow range in May even as a less feasible arbitrage increased buyers' reliance on domestic supplies.Steady output and a less workable arbitrage pointed to muted domestic demand. Total paraffinic base oils output held at around 439,000 tonnes in May, OilChem China data showed.The volume was at a similar level during two of the previous three months.China’s base oils production in May was up at least 13% from output levels during the same month in 2022 and 2023, but still down more than 20% down from May 2021.The lower supply pointed to more muted demand since then.Output held steady in May even as the country’s domestic Group II base oils prices lagged higher FOB NE Asia cargo prices during the second quarter.The diverging price trend made the arbitrage even harder to work.The closed arbitrage incentivized regional refiners to move more shipments to other markets instead.The closed arbitrage also increased domestic buyers’ reliance on supplies from local refiners.Any price support from such moves was limited.China’s domestic Group II prices instead weakened relative to Shandong diesel prices in May.The shrinking premium to diesel pointed to slack demand and boosted the incentive for refiners to maintain or trim base oils output.Any such move to cut output would coincide with a time of year when demand typically faces a seasonal slowdown during the summer months.Several Group II base oils units in China were scheduled to undergo maintenance work in May and June.China’s Group I base oils output recovered to around 75,000 tonnes in May, from an eight-month low of less than 70,000 tonnes in April.Output fell in April because of the shutdown of a major Group I base oils unit for maintenance work.Output remained lower than usual in May even after the base oils unit resumed operations early that month.China’s domestic Group I base oils prices remained unusually firm relative to Group II prices in May, reflecting the grade’s still-tighter supply dynamics..China April base oils imports fall .China’s April base oils output falls