India’s June Group I SN 500 imports fall

India’s imports of Group I heavy-neutrals fell to an eighteen-month low in June amid a slump in shipments from the Middle East.

Total imports of around 5,000 tonnes of Group I heavy-neutrals in June fell from close to 10,000 tonnes the previous month, provisional customs data showed.

The May volume was already down from typical imports of close to 20,000 tonnes/month in the four months to April and coincided with plant-maintenance work in Iran.

The lower volumes in May left India’s buyers with squeezed inventories.

The drop in shipments in June compounded the supply-tightness.

The drop in shipments highlighted ongoing repercussions of the Israel-Iran conflict in June even after the cessation of hostilities.

One repercussion of the tighter supply was a jump in India’s imported Group I SN 500 cargo price relative to other grades and other regions.

The price-premium of CFR India SN 500 over the FOB Asia cargo price widened in first-half July to the highest level in more than a year.

Another repercussion of the tighter supply could be a pick-up in India’s demand for Group II base oils to cover blenders’ heavy-grade requirements.

Buyers had previously sought to procure more Group I base oils because of their steep price-discount compared with Group II supplies.

Any moves to procure more Group II supplies would reduce that cost-benefit.

The scenario already began to materialise in May and June.

Group II heavy-neutrals shipments accounted for more than 90% of India’s combined Group I and Group II heavy-grade imports in June and more than 87% in May.

The share was up from 72% in the first four months of the year.

Any further moves to procure more Group II base oils and hold larger stocks could also limit recent pressure on Asia’s Group II heavy-grade prices.

Those prices weakened relative to light-grade base oils and Group I base oils in response to easing supply-tightness following the completion of most plant-maintenance work in Asia.