China’s base oils output rose in October to the highest in almost three years on the back of a jump in production of premium-grade base oils.The rise in supply raised the prospect of cutting further the country’s requirements for shipments from overseas markets.Total paraffinic base oils output of more than 510,000 tonnes in October rose from close to 470,000 tonnes the previous month, OilChem China data showed.The September volume was the highest in eight months. The October volume was the highest since end-2021.Production levels jumped on the back of a surge in the country’s Group II base oils output to more than 390,000 tonnes. That volume was also the highest since end-2021.Higher base oils output coincided with downward pressure on the country’s Group II base oils prices relative to domestic diesel prices.But the Group II premium to diesel remained in a relatively narrow and firm range that it had held in since the start of the second quarter of the year.The still-firm premium suggested that demand was sufficient to absorb most of the supplies.The premium of domestic prices for imported Group II base oils over FOB Asia cargo prices fell more sharply in October to the lowest in more than three months.The narrower premium complicated the arbitrage to move shipments from markets like Taiwan to China.The trend suggested that China’s domestic supplies were covering more of the country’s requirements at the expense of shipments from other markets.China’s Group III base oils output of more than 47,000 tonnes in October rose from less than 40,000 tonnes the previous month to a record high.Rising output of the premium-grade base oils could replicate the pattern of the Group II market, where rising domestic supply cut requirements for overseas shipments..China’s September base oils imports fall.Asia lube demand likely to improve in Q1
China’s base oils output rose in October to the highest in almost three years on the back of a jump in production of premium-grade base oils.The rise in supply raised the prospect of cutting further the country’s requirements for shipments from overseas markets.Total paraffinic base oils output of more than 510,000 tonnes in October rose from close to 470,000 tonnes the previous month, OilChem China data showed.The September volume was the highest in eight months. The October volume was the highest since end-2021.Production levels jumped on the back of a surge in the country’s Group II base oils output to more than 390,000 tonnes. That volume was also the highest since end-2021.Higher base oils output coincided with downward pressure on the country’s Group II base oils prices relative to domestic diesel prices.But the Group II premium to diesel remained in a relatively narrow and firm range that it had held in since the start of the second quarter of the year.The still-firm premium suggested that demand was sufficient to absorb most of the supplies.The premium of domestic prices for imported Group II base oils over FOB Asia cargo prices fell more sharply in October to the lowest in more than three months.The narrower premium complicated the arbitrage to move shipments from markets like Taiwan to China.The trend suggested that China’s domestic supplies were covering more of the country’s requirements at the expense of shipments from other markets.China’s Group III base oils output of more than 47,000 tonnes in October rose from less than 40,000 tonnes the previous month to a record high.Rising output of the premium-grade base oils could replicate the pattern of the Group II market, where rising domestic supply cut requirements for overseas shipments..China’s September base oils imports fall.Asia lube demand likely to improve in Q1
