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South Korea’s base oils exports to the Middle East rose to a sixteen-month high in July, contrasting with a dip in shipments to India to a ten-month low.
Total base oils exports to the Middle East came to close to 38,000 tonnes in July, government data showed.
The volume rose for a third-month from year-earlier levels to the highest since March 2024.
More than 25,000 tonnes of the shipments moved to the UAE, which is the key destination for spot shipments from overseas markets.
A rise in Asia’s base oils exports to the Middle East often coincides with moves to clear a pick-up in the region's spot supplies.
The rise in South Korea's exports to the Middle East in July pointed to such a dynamic.
It also pointed to more muted demand from term buyers in other markets at a time of year when consumption in Asia typically faces a seasonal slowdown.
A surge in India’s base oils imports in July likely left blenders’ stocks at more comfortable levels, curbing their urgency to lock in additional volumes from suppliers like South Korea.
A rise in Asia’s spot supplies and the need to clear those volumes in more distant markets typically puts pressure on a large adjustment in base oils prices to facilitate those moves.
The rise in shipments to the Middle East coincided with lower FOB Asia Group II heavy-grade base oils prices during the third quarter of the year.
But the fall in prices was relatively small, while prices for light-grade base oils rose.
The relatively firm prices suggested that demand was sufficiently strong in markets like the Middle East to absorb the pick-up in supplies from sources like South Korea.
Strong demand curbed pressure on Asia’s refiners to make larger price-adjustments or to target more distant markets with surplus volumes.
Strong demand in the Middle East, at a time when consumption is typically lower, could reflect tighter availability of Group I heavy neutrals and increasingly competitive prices for Group II supplies as an alternative.
