Singapore's base oils exports rebounded to a four-month high in August, but a surge in shipments to the US diverted much of the additional supply away from Asia.

Base oils exports rose to 178,000 tonnes in August, up from 143,000 tonnes in July and the highest in four months, Enterprise Singapore data showed.

That returned exports to typical levels in the year to April, following a three-month slide that saw shipments fall below 120,000 tonnes in May and June.

The earlier slowdown came as supply disruptions across Asia and the Middle East reduced base oils availability in the region. Singapore’s lower exports in May and June coincided with weaker shipments from Taiwan and a slump in Middle East supply, leaving Asian buyers with fewer alternative sources.

August’s recovery did little to ease those constraints. Domestic exports rose only moderately, while re-exports surged and shipments to the US reached their highest level in more than six years, diverting more of the available supply away from Asia.

Key Highlights

·         Domestic exports recovered to 134,000 tonnes, a four-month high, but stayed below typical monthly levels of 147,000 tonnes in the year to April.

·         Re-exports jumped to 44,000 tonnes, the highest in 14 months, after Singapore's own imports surged to a more than nine-year high in July.

·         Exports to Southeast Asia rose to a four-month high of 69,800 tonnes but remained below typical monthly levels of more than 81,000 tonnes in the year to April.  

·         Exports to China slumped to less than 7,000 tonnes, the lowest in more than nine years.

·         Exports to India recovered to a four-month high of close to 23,000 tonnes, but remained below typical levels of more than 32,000 tonnes.

·         Exports to the US surged to more than 29,000 tonnes, the highest since March 2020, from less than 10,000 tonnes over the first seven months of the year combined.

Market Repercussions

Higher domestic exports would point to a more sustained recovery, but continued US-bound shipments would absorb much of any further pick-up in Singapore’s exports.

More of the city-state’s cargoes moved to the US in September, extending the diversion and leaving a smaller share of supply for Asian buyers.

That matters as other sources of supply remain constrained. China’s August imports fell to a multi-year low, India’s domestic availability remains tight, while upcoming maintenance in Taiwan and Saudi Arabia will further restrict regional supply.

A wave of arbitrage shipments from Taiwan and South Korea to the Americas in recent weeks has removed additional supply from Asia.

The continued diversion of Singapore cargoes adds to those constraints, reducing the surplus available at the end of the third quarter just as seasonal demand begins to strengthen.