US' March base oils exports stay high

US base oils and lube exports stayed high in March, pointing to ongoing availability of surplus supplies to clear from the domestic market.

The lingering surplus volumes followed a slump in US base oils output to a four-year low in February.

They also coincided with a heavy round of plant maintenance in the US from the end of the first quarter of the year.

The ongoing availability of surplus volumes suggested that domestic demand remained unusually weak even with the drop in domestic supply and a seasonal pick-up in requirements.

Total base oils and lube exports of 3.90 million barrels (549,000 tonnes) in March edged down from 4.02 million barrels the previous month, government data showed.

Even with the slowdown, total shipments of 11.68 million barrels in the first three months of the year rose by 1% from year-earlier levels to a record-high.

The previous record-high was during the first quarter of last year.

Exports stayed high so far this year on the back of a sustained wave of shipments to outlets like Mexico, Africa and India.

Those markets are key outlets for surplus spot volumes.

The trend continued through March, especially to West Africa.

A rebound in shipments to South America in March added to the firm export volumes.

Even with the rise in flows to South America, shipments to Africa, India and Mexico combined accounted for more than 50% of total US exports in March for the eighth time in nine months.

Their export share exceeded that level five times in all of 2023 and once in 2022.

Exports to regular outlets for surplus supplies stayed high in March even at a time of year when domestic blenders typically sought to replenish stocks ahead of a seasonal pick-up in lube consumption.

US Group II base oils prices rose relative to feedstock vacuum gasoil prices in April, pointing to such a pick-up in demand.

The high export volumes in March suggested that the strength of any such pick-up in domestic demand was insufficient by itself to support those higher margins.