India’s November base oils imports rise

India’s base oils imports rose in November as high volumes from the Middle East and Taiwan countered a dearth of arbitrage shipments from the US.

Total imports of more than 320,000 tonnes in November rose from around 305,000 tonnes the previous month, government data showed.

Imports held above the 300,000 tonnes/month level for a third month in November, even as plant maintenance work cut base oils output in South Korea in October.

The northeast Asian country is India’s largest overseas source of base oils supplies.

India's firm import volumes in November suggested that any impact from the maintenance work peaked during the third quarter of the year rather than the fourth quarter.

India’s base oils imports also held firm even as shipments from the US fell to a two-year low of less than 4,000 tonnes in November.

Almost all the volume consisted of regular shipments of naphthenic base oils rather than arbitrage supplies of paraffinic base oils.

India’s firm import volumes, even with the lack of arbitrage flows from the US, highlighted the country’s plentiful supplies from other, more regular sources.

Arbitrage shipments from the US typically helped to top up Indian blenders’ supplies at competitive prices.

But India’s firm imports in recent months highlighted that the shipments were not essential to cover requirements.

The lack of necessity to secure supplies from the US was likely to increase over the coming year as new base oils production capacity in India starts to come online.

The new capacity is likely to curb India’s requirements for base oils imports, and especially for arbitrage shipments from markets like the US.

The impact on the US could be relatively muted.

The country’s base oils exports stayed high in recent months, even without any pick-up in arbitrage shipments to India.

The high export volumes curbed the speed of any supply-build in the US market and highlighted its increasingly limited reliance on India as an outlet for surplus shipments.

More US shipments moved instead to outlets like West Africa and Latin America.