South Korea's base oils exports to India fell to a 20-month low in May, as suppliers redirected volumes to markets where prices were higher
Exports from Taiwan and Singapore to India also slowed, pointing to a broad-based pullback among Asian suppliers
Lower crude oil prices, elevated domestic output, and expectations of rising surplus supply incentivized India's buyers to maintain lean stocks
South Korea's base oils exports to India fell to a 20-month low in May, but elevated domestic output and cautious procurement pointed to a shift in buyer behaviour as concerns about shortages began to ease.
Exports fell to less than 60,000 tonnes in May, down 37% year on year to the lowest since September 2024, Korea Customs Service data showed.
The decline contrasted with a gradual recovery in South Korea's overall exports during May, and with the ongoing pause in Middle East shipments that had initially freed up cargoes for India.
South Korean supply to India instead pulled back just as buyers had less reason to seek additional volumes.
Key Highlights
· South Korea shipped less than 250 tonnes to the Middle East in May, extending a near-complete halt in flows that began in March.
· Shipments from Taiwan and Singapore to India saw similar declines in May, pointing to a broad-based pullback across Asian suppliers.
· Asia gasoil prices peaked in early April before sliding steadily since then, while CFR India Group II prices maintained a steep discount to FOB Asia prices throughout the second quarter.
Market Repercussions
The fall in shipments followed the slump in India prices relative to other regions that incentivised suppliers to target other markets instead.
The closed arbitrage coincided with sliding regional gasoil prices and firm domestic base oils output, reducing buyers’ need to secure additional spot cargoes at elevated prices.
The ongoing decline in crude oil prices during May and so far in June further weakened incentives to build stocks.
The pattern pointed to a shift from earlier in the year, when buyers secured additional supplies that had been bound for the Middle East to cover against shortages.
The same disruption remained in place in May, but buyers’ urgency to lock in additional volumes had changed.
The prospect of a reopening of the Strait of Hormuz could reinforce that trend. Expectations of improving availability and lower prices would encourage buyers to keep inventories lean and delay procurement plans.
Weaker lubricants consumption during the monsoon season would provide additional leeway to hold back.
More cautious demand would coincide with recovering export availability following the completion of maintenance work, leaving suppliers under greater pressure to compete for outlets.