Singapore's base oils imports exceeded exports in July for the first time in five years, pointing to weak domestic production
Imports from Europe and the US surged despite tighter supplies and higher prices in those markets
Saudi Arabia's August maintenance and seasonal demand growth in China and India could extend the current supply squeeze
Singapore became a net importer of base oils in July for the first time in five years, signalling persistently weaker domestic production as Middle East supply disruptions stretched into a fifth month.
Base oils exports edged up to about 135,000 tonnes in the four weeks to July 29 from the previous week, Enterprise Singapore data showed. That would still leave July exports well below the monthly average of almost 180,000 tonnes in the year to April and at their third-lowest level since October 2022.
Imports climbed above 140,000 tonnes over the same four weeks, the highest monthly volume in at least nine years. They exceeded exports for the first time in five years and for just the second time in at least nine.
Re-exports held below 20% of total exports, little changed despite the sharp increase in arrivals and still-low total export volume. That pointed to most imported barrels staying in Singapore rather than being shipped on, suggesting domestic output remained low.
Singapore's lower exports coincided with a slump in Middle East flows to Asia as supply disruptions that began at end-February extended through the third quarter.
Key Highlights
· Weekly exports fell below 15,000 tonnes, ending a three-week recovery.
· Exports to India remained near multi-year lows, while shipments to China moved closer to more typical levels.
· Combined imports from Europe and the US climbed to more than 60,000 tonnes, the highest since December 2020.
Market Repercussions
Europe and the US supplied the additional shipments despite substantially higher prices than in Asia, indicating the shipments were driven by supply requirements rather than arbitrage.
The additional shipments reduced availability in Europe and the US, where supply-demand balances were already tighter than in Asia.
The pressure could intensify in August. Saudi Arabia's scheduled maintenance is expected to reduce exports just as seasonal demand revives in China and India, while constrained flows through the Strait of Hormuz continue to complicate feedstock supply.
Those pressures could leave buyers relying on replacement cargoes from Europe and the US through the third quarter unless Singapore's production recovers more strongly.