Tuxing double cylinder compressor - air smells like something burned inside

Bought new few months ago.
It has about 2 hours on it so far
Followed instructions to the letter, missed no steps.
It never exceeded 59°C
Works fine, builds up pressure fine, fills a 6.8L scuba bottle fine.
I'm using that small blue filter that comes with it and a longer gold one which has that brown descant in it and the white sponge like filters.
With those two filters air comes out dry even with all the humidity in my part of the world this time of the year.

But it smells like something burned.

I use Bauer diving compressor oil. Expensive but best for high pressure compressors.

First oil change was after first 45 minutes of running, I wanted to flush all the machining residue and sure, there was some aluminium dust in the oil.
Color of the oil is OK, no water in the oil.
After running, first cotton filter is really moist from all the humidity I live in but it's clean moist, no oil in the compressed air.

So, everything seems to be fine except that burned smell.
And it's not like old motor oil smell, more like singed fabric smell.

I will add one more filter with activated carbon to neutralise the smell but I would rather address the cause if there's something wrong

Anyone encountered something like this before?
 
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