Singapore's base oils exports surged to a six-month high in the four weeks to 23 September as a wave of shipments moved to Europe and the US, keeping supply in Asia tight.

Total base oils exports rose to more than 190,000 tonnes in the four weeks to 23 September, from just over 141,000 tonnes the previous week, the highest since March, Enterprise Singapore data showed.

Domestic exports, rather than re-exports, drove the rise, climbing to more than 173,000 tonnes and accounting for 90% of total exports, up from 75% in August.

But the surge in exports failed to translate into a pick-up in flows to markets in Asia, with more than half of the past week’s shipments moving to destinations in Europe and the US.

The unusual wave of shipments followed a surge in exports from South Korea and Taiwan to the same markets earlier in the third quarter, curbing a build-up of surplus volumes in Asia at a time when demand faced a seasonal slowdown.

Singapore's continued exports to the US and Europe in September instead coincided with a seasonal pick-up in regional demand.

Key Highlights

·         Weekly exports rose to more than 85,000 tonnes, the highest since the first half of March, driving the four-week total higher.

·         Shipments to the US extended their surge, holding above 35,000 tonnes over the four weeks for a second straight week.

·         The past week’s cargo to Spain, of 21,000 tonnes, was the largest in at least nine years; a cargo to the Netherlands, of close to 15,000 tonnes, was the largest since December 2019.

·         Four-week exports to China remained below 20,000 tonnes and at around 20,000 tonnes to India, both well below typical levels.

·         Exports to Southeast Asia edged up to 54,000 tonnes but remained well below the region's typical monthly pace of more than 75,000 tonnes over the past year.

Market Repercussions

Singapore's own supply is finally showing a sustained recovery after struggling for much of the past four months.

But the flows to Europe and the US mean that recovery is doing less to improve availability for Asian buyers just as supply is set to tighten during planned maintenance work in Taiwan and Saudi Arabia early in the fourth quarter.

The surge in shipments to Europe and the US coincided with an open arbitrage to move Group II base oils to those markets. But it also marks a sharp reversal from a wave of shipments from those markets to Singapore in recent months.

The volume to Europe is also large for a market whose Group II supply is typically around 160,000 tonnes a month, while its total imports of Group I and Group II base oils from Asia averaged less than 1,000 tonnes a month in the past year.