India’s June base oils imports fall

India’s base oils imports fell in June as shipments from the Middle East dipped to a two-year low.

Lower imports coincided with ongoing domestic plant-maintenance work and lube consumption that remained at elevated levels.

The more squeezed fundamentals showed signs of extending into the third quarter of the year, even with a slowdown in domestic consumption during the monsoon season.

India’s imported base oils cargo prices held at levels that kept open the arbitrage from Asia and the US even with the seasonal slowdown in demand.

The dynamic pointed to ongoing concern about tight supplies, especially at a time of increased geopolitical tensions in the Middle East.

India’s base oils imports came to around 335,000 tonnes in June, provisional customs data showed.

The volume fell from more than 370,000 tonnes in each of the previous two months to the lowest since February.

Imports fell as shipments from the Middle East slid to the lowest since April 2023.

The drop in supplies cut the region’s share of India's total imports to the lowest in more than a year.

Shipments from the Middle East benefit from their logistical proximity to India.

But they also faced the danger of geopolitical disruption to supplies from sources like Iran.

The drop in shipments from the Middle East increased India’s reliance on supplies from more distant markets and the longer time between procurement and delivery of supplies from those markets.

Steadier flows from Asia partially cushioned the slowdown in shipments from the Middle East.

Firmer buying interest from India balanced out the impact of improving availability and a seasonal slowdown in demand in Asia.

Any extension of that firmer buying interest would coincide with improving arbitrage opportunities to move more shipments to China.

A scenario of more arbitrage flows to both India and China could leave Asia’s supply-demand fundamentals more balanced than usual during the third quarter of the year.