Base oils shipments from the Saudi ports of Yanbu and Jeddah rebounded in January, recovering from a four-year low in December that slashed flows to key markets like UAE, India and Asia.

Total shipments from the two ports combined rose to more than 40,000 tonnes in January, climbing from less than 25,000 tonnes in December, provisional shipping data showed.

Most cargoes loaded in the second half of January and headed for the UAE.  

Flows to other destinations stayed lower than usual, compounding tighter supply conditions in markets such as India, where buyers were preparing for peak lubricants demand toward the end of the first quarter.

Key Highlights

·         The first sizeable cargo to India loaded in first-half February, leaving that market facing a second straight month of sharply lower supplies from Saudi Arabia.

·         India’s January volumes from Saudi Arabia consisted almost entirely of very-light grade base oils, with no shipments of other Group I or Group II light or heavy neutrals.

·         Singapore’s imports from Saudi Arabia extended their pause into the first three weeks of February, with the last cargo arriving in November.

·         Shipments from Jeddah stayed lower than usual in January, coinciding with a planned 12-day inspection of the Group I plant there.

·         February cargo loadings from Yanbu and Jeddah show signs of returning to pre-shutdown levels before the Yanbu plant’s mid-November outage last year.

Market Repercussions

A pick-up in shipments over the coming weeks would coincide with a seasonal rise in demand in key destination markets including India and Europe.

Exports then face the prospect of slowing again in the third quarter because of the scheduled shutdown of the Yanbu base oils plant for expansion works.

Following the shutdown, the expanded unit is expected to start operations in the second half of the year. The new capacity will be capable of producing Group II or Group III base oils depending on market conditions.