Singapore's base oils imports climbed to their highest level in more than five years in the month to mid-July while exports stayed low, suggesting that domestic production remained lower than usual.

Imports rose to more than 120,000 tonnes in the four weeks to July 15, Enterprise Singapore data showed.

Weekly arrivals exceeded 46,000 tonnes, the highest in more than four years, lifting monthly imports to their highest level since December 2020.

Most of the increase came from the US and Europe, despite both markets commanding far higher prices than Asia.

The flows ran counter to normal arbitrage economics, suggesting the cargoes were being drawn into Singapore to support regional supply commitments.

Exports remained unusually weak despite the additional imports, pointing to local production staying below normal.

Key Highlights

·         Imports from the US and Europe climbed to one of their highest levels in five years despite firmer prices in both markets.

·         Exports fell sharply to China and to their lowest to India in more than two and a half years, while shipments to Southeast Asia held steady.

·         The share of re-exported cargoes changed little, indicating much of the imported supplies was being consumed within Singapore's domestic market.

Market Repercussions

Singapore continued drawing unusually large volumes from the US and Europe, suggesting imported supplies were still needed to supplement lower domestic production.

Those cargoes tightened availability in markets where prices were already well above Asia.

July's large inflows suggested Singapore would continue requiring additional supply over the coming weeks, pointing to production staying below normal.

That leaves Asia increasingly reliant on alternative suppliers, particularly South Korea, ahead of an expected recovery in demand from August.