India’s Nov supply exceeds demand

India’s base oils supply exceeded demand in November for the first time in nine months as a rebound in domestic output coincided with higher base oils imports.

Base oils output of 123,000 tonnes in November rose from 90,000 tonnes in October to a six-month high, government data showed.

Output had stayed unusually low since a key base oils plant underwent maintenance work at the start of the second half of the year.

Lower output coincided with a sustained rise in India’s domestic lube consumption.

The diverging trends left India’s base oils supply unusually tight.

The rise in output in November helped to reverse that dynamic.

Total supply, or base oils output and imports combined, rose to almost 450,000 tonnes in November. The volume was the highest since last May.

Total demand, or domestic consumption and exports combined, by contrast slipped in November to a nine-month low of less than 425,000 tonnes.

Supply duly exceeded demand for the first time since last February.

India’s base oils output is likely to extend its rise this year as a wave of new production capacity starts to come online.

Higher output would help to cover any further rise in India’s domestic lube consumption.

It would also cut the country’s reliance on base oils imports that currently cover most of its requirements.

Higher base oils supply at end-2024 already curbed the urgency for buyers to lock in additional overseas volumes to replenish stocks.

The dynamic instead gave buyers the option of holding lower inventories and replenishing their stocks more frequently.

It also cushioned the impact of a sustained slump in arbitrage shipments from the US during second-half 2024 and any extension of that trend early this year.

Higher supply instead gave buyers more leverage to target more competitive prices for any pick-up in such shipments in the coming months.