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Exports fell to a four-month low after a fourth-quarter surge that covered for Saudi plant maintenance
Combined exports from US, Europe and Asia surged to multi-year highs in the three months to November, lifting stocks across the region
High inventories, the completion of Saudi maintenance, and the resumption of Saudi exports are likely to curb a repeat of such high flows
Asia’s base oils exports to the Middle East fell to a four-month low in December, easing after a surge in global shipments to the region during the previous three months that covered for plant-maintenance work.
Asia’s exports to the UAE and Saudi Arabia combined fell to less than 35,000 tonnes in December, down from average monthly levels of more than 57,000 tonnes during the three months to November, government data showed.
The earlier surge in shipments helped to offset a dip in regional base oils supply because of plant-maintenance in Saudi Arabia during the final six weeks of the year.
The pullback in December coincided with the completion of the maintenance work and subsequent recovery in Saudi Arabia’s exports from mid-January.
Key Highlights
· Asia’s base oils exports to the UAE fell to 15,000 tonnes, down from more than 47,000 tonnes/month during the three months to November and the lowest since March.
· Exports to the UAE dipped amid a slowdown in flows from South Korea and a pause in shipments from Taiwan for the first time in four months.
· Combined exports from the US, Europe and Asia to the Middle East surged to more than 110,000 tonnes in October, up from average levels of 38,000 tonnes/month in the first half of the year to a multi-year high.
· Total shipments of at least 265,000 tonnes in the three months to November were up from 248,000 tonnes in October, with exports never previously exceeding the 200,000-tonne level.
· The inflows helped to cover for a slump in base oils exports from Saudi Arabia’s ports of Yanbu and Jeddah, which fell to a five-year low of less than 15,000 tonnes in December, down from typical levels of more than 50,000 tonnes/month.
Market Repercussions
The scale of the fourth-quarter surge in base oils exports to the Middle East likely outweighed the loss of supply during the Saudi plant shutdown.
The subsequent rise in blenders’ stocks, and the resumption of flows from Saudi Arabia from mid-January, could curb a repeat of such large shipments to the region any time soon.
The surge in shipments during the fourth quarter helped to clear surplus volumes from Asia, Europe and the US during that period.
The impact of any slowdown in base oils exports to the Middle East in the coming months could be muted as a seasonal recovery in demand in those other markets absorbs more supply, trimming surplus availability.
