Asia base oils exports rose to the highest since March 2023, helping blenders meet seasonal demand
Strong shipments to India and China offset rising regional output, keeping the market balanced in Q1
Disruptions since late February shifted the market from surplus concerns toward tighter supply conditions
Asia’s base oils exports rose to a three-year high in March, helping to meet a seasonal rise in demand while tightening the regional supply balance heading into the second quarter.
Total exports rose to more than 730,000 tonnes in March, up from less than 590,000 tonnes in February and the highest since March 2023, Korea Customs Service, Enterprise Singapore, Statistics Indonesia and other government data showed.
The increase extended a trend that began late last year, with stronger export flows helping meet rising demand and absorb growing regional supply.
The stronger flows kept surplus volumes manageable even as regional production capacity continued to grow.
Disruptions in the Middle East since late February then shifted concerns from oversupply to growing tightness.
Strong exports delayed the impact of that tightening for blenders into the second quarter.
Key Highlights
· Exports to India rose close to a six-month high and well above typical levels over the past year.
· Shipments to China rose to a 27-month high, adding to its strong domestic base oils output.
· Flows to Southeast Asia edged up but lagged the increases in India and China.
· Exports to the Middle East slumped to the lowest in at least a year, with a shipment from Thailand likely redirected to other markets.
· First-quarter exports of more than 2.0 million tonnes were similar to the previous quarter, matching the highest volume since the beginning of 2023.
Market Repercussions
Rising supply earlier in the year required stronger demand to absorb the additional volumes, leaving the regional market relatively balanced by the end of the first quarter.
Subsequent disruptions to crude and product flows since late-February reversed that dynamic, raising the prospect of tighter near-term availability.
Tighter supply over the coming months pointed to lower export availability, increasing the risk of a supply shortfall if demand remained strong.
Any such slowdown in shipments was likely to have a larger impact on markets more reliant on overseas supplies, such as India and Southeast Asia.