Singapore’s base oils exports rose to their highest level since May, offering some relief from the regional supply squeeze caused by lower Middle East flows
A rare and unusually large cargo to the UAE drove much of the increase, while shipments to China and Southeast Asia stayed low
Imports from China and South Korea surged to multi-year highs, suggesting buyers were diversifying supply sources after Singapore’s prolonged export slump
Singapore’s base oils exports rose to their highest level since May in the four weeks to August 12, offering a tentative recovery after months of weak shipments shifted supply toward competing Asian refiners.
Total exports rose to more than 140,000 tonnes in the four weeks to August 12, the highest level since the second half of May, Enterprise Singapore data showed.
The improvement followed firmer overseas shipments in three of the past four weeks, breaking a pattern of sharp weekly swings that had persisted since early May. Domestic exports also stayed above 33,000 tonnes for a second week, the first time that had happened since late April.
Singapore’s export slump since May had compounded the drop in Middle East supply to Asia, forcing buyers to turn increasingly to other suppliers including South Korea and China. A sustained recovery in Singapore shipments could begin to reverse that shift.
Key Highlights
· Four-week exports to India extended a strong rebound from unusually low levels in June and July, while shipments to China and Southeast Asia remained near the low end of their ranges.
· A large cargo to the UAE helped lift total exports to their highest level since May. It was the first such shipment since March and the largest in at least nine years.
· Four-week imports fell to less than 110,000 tonnes, the lowest in more than a month but still well above the typical sub-65,000-tonne monthly pace in the year to June.
· Imports from China reached a four-week record above 20,000 tonnes, while flows from South Korea climbed to their highest since February 2020.
Market Repercussions
A sustained pick-up in Singapore's exports would help ease the regional squeeze caused by the drop in Middle East flows to Asia, and push back against the opportunity created for other refiners by the city-state’s export slump.
Any recovery would need to hold. The jump in Singapore's imports from South Korea and China suggested buyers were already turning to alternative sources to cover their requirements. Even if Singapore sustains higher exports, buyers are likely to maintain a broader range of suppliers than before.
The recovery could also prove difficult to sustain while disruptions continue to affect feedstock availability and shipping flows through the Strait of Hormuz.