India's Dec v light-grade imports rise

India’s imports of very-light grade base oils rose to a twenty-month high in December on the back of a rise in shipments from Mideast Gulf and Europe.

Imports of more than 130,000t of Group II+ N60 and N70 base oils in December rose from less than 120,000t the previous month, provisional customs data showed.

The volume exceeded the 120,000 t/month level for the first time in a year and outpaced typical import levels of around 100,000 t/month over the year.

The pick-up in supplies coincided with a rise in the premium of India’s retail diesel price over cfr India N70 prices to a four-month high, ICIS data showed.

The premium extended its rise in January.

A widening retail diesel premium to light-grade prices has previously coincided with higher imports of the product.

The higher retail diesel premium coincided with a rebound in cfr India N70 prices over Asia gasoil prices to a seven-month high in November.

The firmer N70 premium over gasoil prices incentivized regional refiners to move more supplies to India.

The domestic and regional price trends triggered a dynamic of rising supply and firm demand.

The N70 premium to regional gasoil prices subsequently fell sharply from second-half November to levels that reduce the attraction of shipping additional volumes to India.

The lower premium raises the prospect of a divergence of supply-demand dynamics.

Base oils imports in December got a boost from a rise in shipments from Qatar and Spain.

The rise in supplies countered a drop in N70 imports from South Korea and Saudi Arabia.