Singapore’s March Base Oils Imports Fall To Nine-Month Low

Singapore’s base oils imports fell to a nine-month low in March as a sustained slowdown in shipments from the US and Europe coincided with an unexpected drop in flows from the Middle East, with the pause in those supplies extending through April.

Total imports fell to 35,100 tonnes in March, down from close to 45,000 tonnes from February and lower year on year for a fourth straight month, Enterprise Singapore data showed.

Growing domestic base oils production capacity reduced the need for top-up supplies from the US and Europe.

The drop in Middle East inflows pointed to early signs of the impact of the cessation in flows from the region since end-February.

Key Highlights

·         March imports from Europe were the second-lowest in nine months, following a pause in flows in February.

·         Imports from Qatar fell to a 15-month low, with supplies even lower in first-half April.

·         Imports from the UAE dropped to a 22-month low, with no cargoes arriving so far in April.

·         There were no shipments from Saudi Arabia for a fourth month, with the pause continuing through April.

Market Repercussions

The reduction in US and European shipments was anticipated as rising domestic production capacity cut Singapore’s need for additional volumes from those markets.

The slowdown in shipments could now magnify the impact of any drop in the island-state’s base oils output because of disruptions to feedstock supply and a focus on maximising motor fuels production.  

The drop in imports from the Middle East pointed to early signs of the impact of the cessation in shipments from the region, with flows yet to resume in April.

The ongoing pause in Middle East shipments added an unexpected supply constraint on top of the structural decline in European and US flows.

The two pressures landed simultaneously, pointing to tightening availability of Group II and Group III base oils.