Global base oils output is edging higher in November, even as some producers have trimmed run rates or diverted supplies back into the diesel pool.
These moves have partially balanced out the effect of an unusually light round of plant maintenance in the fourth quarter of the year. They have also maintained production in a relatively narrow range since May. But they also reflect the limitations of those moves as output continues to rise.
Total global production in November is on course to rise by 1.2pc from October and by 2.9pc from November last year, according to Argus' proprietary base oils supply index. Average output in the first 11 months of this year is some 4.6pc higher than year-earlier levels.
Production is calculated as the monthly average of daily nameplate capacity less plant maintenance. It excludes new plants that are in the start-up process, but have yet to begin commercial sales while production first stabilises.
Output in North America rises by 3.9pc in November from the previous month, according to the index, following the expected completion this month of a plant shutdown that began in early October. But production remains slightly lower than usual because of continuing moves to trim base oil supply in response to weak margins.
Production in Europe rises by 2.5pc in November from the previous month to its highest level since August. Output has been impacted by maintenance work throughout the region every month since July.
Production in Asia-Pacific edges down by 0.5pc in November from the previous month because of refinery run cuts. Even with these measures, output is still at its second-highest level on record. Rather than tighten the market, the plant run cuts raise the prospect of providing competing supplies with the opportunity to expand their market share.
