Global base oils exports to Africa fell sharply in July as spot shipments shrank, leaving Nigeria increasingly exposed as seasonal demand begins to recover.

Combined exports to Egypt, Nigeria, South Africa and Kenya fell to around 60,000 tonnes in July from more than 95,000 tonnes in June, Eurostat, US Census Bureau, Korea Customs Service and other government data showed.

The decline was concentrated in spot markets, while flows to term buyers held up better. A growing share of a smaller total went to South Africa, a term buyer, extending the shift into a fourth month.

Nigeria's share fell to its lowest level in more than two years, reflecting its greater exposure to spot supply.

Availability of spot volumes typically rises during the third quarter as refiners seek outlets for surplus supplies amid a seasonal slowdown in demand in the US, Europe and Asia.

The lack of these shipments to major spot-market destinations, particularly Nigeria, points to tighter-than-usual base oils supply, complicating buyers’ ability to replenish stocks before seasonal demand picks up from the end of the third quarter.

Key Highlights

·         South Africa's share of exports rose to more than 56% in July, rising for a fourth straight month to the highest level since May 2024.

·         Egypt's share held steady at 27%, close to its 25% average over the past year.

·         Nigeria's share held below 10% for a second month, its lowest level since May 2024.

·         Exports to Nigeria held below 10,000 tonnes for a fourth straight month, after averaging close to 25,000 tonnes a month in the year to March.

·         Europe's share of exports to Africa fell to 61% but remained above 60% for a fourth month.

Market Repercussions

Demand in Nigeria typically starts to revive from September, as the rainy season ends. But base oils shipments remained below normal levels for a fourth month in July, with spot shipments remaining weak through the rest of the third quarter.

The slowdown limited Nigerian buyers’ ability to rebuild stocks ahead of the increase in demand. Enquiries for vessels from India to Nigeria have emerged, but no significant volumes have moved.  

Nigeria could yet see a typical pick-up in surplus supply during the final weeks of the year, with buyers in other markets already growing more comfortable holding leaner stocks.

But any such surplus is likely to be smaller than usual, especially with high diesel prices incentivizing refiners to allocate more production toward diesel.

Another alternative has begun to emerge, with rising Chinese lubricants exports giving blenders a way to secure finished product even without base oils cargoes.

The shipments also give China a fresh opening into a market where its exports have historically been limited.