Singapore’s base oils exports rose to a three-month high in the four weeks to 4 March, extending the previous week’s surge even as the risk of refinery run cuts threatened to slow shipments ahead of the peak-demand season.

Total exports rose to 180,000 tonnes, edging up from 176,000 tonnes last week to the highest level since early December, Enterprise Singapore data showed.

Domestic exports held firm close to an 11-month high, while re-exports climbed to a one-month high.

Key Highlights

·         Exports to China remained elevated even as they edged lower and lagged year-earlier levels.

·         Exports to Southeast Asia held firm, staying within the narrow range seen since mid-November.

·         Exports to India recovered, returning to the narrow range maintained since mid-January.

·         Imports got a boost from a resumption of large shipments from China, following a slowdown during the Lunar New Year holiday period.

Market Repercussions

Singapore is Asia’s second-largest base oils exporter after South Korea and a key supplier to regional markets.

Shipments to India could grow in importance in the coming weeks to cover any disruptions to flows from the Middle East at a time when Indian blenders push to meet lubricants demand targets ahead of financial year-end in late March.

But Singapore’s ability to sustain those shipments could face headwinds if disruption to crude oil supplies from the Middle East prompted local refiners to cut run rates.  

Surging diesel crack spreads added to the incentive to reduce base oils throughput.

Concern over such a scenario could trigger a pick-up in demand as buyers sought to lock in supplies. Such a move could exacerbate any subsequent tightness.