US base oils exports slid in December to the lowest in almost a decade, adding to a drop in global supply at a time of year when refiners typically struggle to clear surplus volumes.
The fall in shipments coincided with a drop in Asia-Pacific base oils exports in December to their lowest in more than two years.
The European market faced a sharp fall in imports from Russia throughout most of last year and a halt to such shipments from early February.
The fall in global supply was unusual for the time of year.
Surplus volumes at year-end typically give buyers the opportunity to start to build stocks ahead of the spring oil-change season.
The volumes also help to create a supply buffer to cover for a typical drop in production during plant maintenance work in the first few months of the year.
Global base oils prices fell late last year and early this year in a way that was similar to previous years.
But the drop in base oils exports from the US and Asia-Pacific in December was different from previous years and curbed buyers’ opportunity to build stocks.
The relative lack of stock-building instead left buyers more exposed to the impact of any planned or unexpected drop in supply during the first few months of the year.
Blenders’ reluctance to replenish stocks late last year and early this year would likely compound the impact of such a drop in supply.
US base oils exports of 1.00mn bl (141,100t) in December fell from 1.49mn bl the previous month and by 45pc from year-earlier levels, government data showed.
The volume was the lowest since first-half 2013.
Exports fell in December from the month of November for the first time in eight years.
Exports typically rise in December from November as refiners clear surplus supplies before year-end.
The fall in shipments cut total US base oils exports to 20.05mn bl in 2022. The volume was down 3pc from 20.64mn bl the previous year.
The small annual contraction concealed a steeper fall in shipments in the second half of the year.
Exports of 4.13mn bl in the fourth quarter fell by 16pc from year-earlier levels to the lowest since the second quarter of 2020.
Exports had fallen during that time as widespread lockdowns slashed lubricants and base oils demand.
The slump in exports in December by contrast coincided with China’s moves to end its zero-Covid restrictions and start to live with the virus.
China had been the last major economy that had continued to enforce major Covid-related restrictions.
