US’ June base oils exports to Africa ease

US base oils exports to Africa and India fell in June to a four-month low amid a slowdown in shipments to South Africa and an almost complete halt in flows to India.

Base oils exports of 103,360bl (14,560t) to Africa in June fell by 46pc from 190,850bl the previous month to the lowest since February, government data showed.

Even with the slowdown, total shipments of 852,720bl to the region in the first half of the year more than doubled from less than 395,000bl during the same period last year.

The surge in supplies from US to Africa helped to cover for a sharp slowdown in spot shipments from Europe and Russia in the first half of the year.

The supply tightness from that region exacerbated the surge in base oils prices in the second quarter of the year. The higher prices raised African blenders’ costs and slashed their profit margins.

The supply tightness is likely to ease over the coming months following the restart of a major base oils unit in Italy during the third quarter of the year.

European base oils and lube demand is also likely to face pressure over the coming months as surging energy costs and rising interest rates squeeze economic growth in the region.

The slowdown in June shipments from the US mostly reflected a drop in supplies to South Africa. A sizable portion of supplies bound for that country likely consisted of term shipments.

Shipments to Nigeria instead rose in June to a three-month high of 102,220bl. Those supplies likely consisted mostly of spot shipments.

The steady flows to Nigeria contrasted with an almost complete halt in US shipments to India in June.

The slowdown reflected India’s more diverse supply sources and more competitive prices from those sources. It also coincided with a drop in Indian demand for very-light grade base oils in recent months.