The start of the spring season and the need to replenish inventories prompted many base oil buyers to return to the market in Asia, allowing for a fairly balanced supply and demand scenario. This condition lent stability to pricing despite volatile crude oil and feedstock values and a slight lengthening of some cuts as most refineries were running at close to full rates – with the exception of some units in China – and lingering economic uncertainties dampened lubricant buying interest.
While demand has definitely experienced an improvement in China, several base oil plants continued to run at reduced rates given overcapacity and a slump in demand during the height of the pandemic. Many new plants had just come on stream in 2019, a few months before the COVID-19 pandemic started. When the coronavirus struck, it triggered strict lockdowns, a stringent zero-COVID policy and a significant reduction in the population’s mobility and industrial output. Some experts speculated that the refinery run rates in China fell to 40% in some cases.