China's combined base oils and lubricants exports surged to a record high in May, as plentiful domestic supply and competitive prices opened markets that other suppliers struggled to reach.

Combined exports rose to more than 70,600 tonnes, more than doubling year on year and up from more than 56,000 tonnes in April, General Administration of Customs data showed. April had already been the second highest in at least six years.

The increase came as disruptions to global supply tightened availability and raised prices in many overseas markets.

China faced the same disruption. But while many regions struggled to replace lost supply, China had sufficient capacity and feedstock availability to increase production, maintain domestic supply and expand exports simultaneously.

Key Highlights

• Lubricants exports rose by 45% year on year to 35,400 tonnes, the second-highest monthly volume on record and the seventh straight year-on-year increase.

• Liberia remained the top destination, while lubricants exports to Japan climbed to more than 1,300 tonnes, from average monthly volumes below 270 tonnes during January-April.

• Base oils exports climbed to 35,300 tonnes from 19,100 tonnes in April and more than tripled from a year earlier.

• Singapore, typically the largest destination for China's base oils exports, accounted for just 28% of the total in May as flows shifted toward India, Europe and Latin America.

• Base oils exports to India rose to more than 8,600 tonnes, a five-month high, while shipments to Europe exceeded 2,000 tonnes against typical monthly volumes of around 200 tonnes, and Latin America reached a 33-month high.

Market Repercussions

China's supply remained abundant and its prices competitive, supporting a record increase in exports even as disruptions tightened availability elsewhere.

Those disruptions were instead creating opportunities for Chinese refiners and blenders to capture a larger share of export markets.

Buyers in India, Europe and Latin America turned to Chinese supply as disruptions reduced availability from traditional suppliers.

The rise in outflows contrasted with the closure of arbitrage opportunities into China, where domestic supply remained abundant and competitively priced, limiting the need for imports.

With the domestic market well supplied and overseas prices elevated, Chinese refiners and blenders directed more volumes into export markets.

China's growing presence in those markets pointed to export gains that would be difficult to reverse even if disruptions eased in the coming months.