Taiwan’s January base oils exports rise

Taiwan’s base oils exports rose in January even as shipments to China fell to a three-month low.

There were signs of a pick-up in exports to China in February as the country’s demand revived after the lunar new year holidays.

This month's rise in shipments to China is likely to curb the flow of supplies from Taiwan to other markets like southeast Asia and India.

The drop in shipments to China last month similarly freed up more supplies to move to those other markets.

The trend revived a pattern in the second and third quarters of last year when Chinese demand was unusually weak.

The need to place surplus supplies added to pressure on regional base oils prices during that time.

Taiwan’s total base oils exports of 45,700t in January recovered from a five-month low of 26,390t the previous month, government data showed.

The January volume was also up from typical levels of around 39,500 t/month over the previous year.

Exports to China fell back to 14,870t in January, from more than 20,000t the previous month and more than 28,500t in November.

The rise in shipments during the final two months of 2022 replenished importers’ stocks.

Demand in China then slowed ahead of and during the lunar new year holidays in second-half January.

Uncertainty about the impact of the spread of the Covid-19 virus in China added to domestic distributors’ preference to manage stocks carefully.

The moves delayed until after the lunar new year holidays any further stock-building in preparation for the spring oil-change season.

Domestic Chinese prices rebounded sharply from the start of February in response to reviving demand and tighter supply.

The flow of shipments from Taiwan to China rebounded in response. China was the destination for most of Taiwan’s base oils exports in first-half February.

A continuation of such a trend would cut the volume of Taiwan’s surplus supplies for other markets and the pressure that those supplies had put on regional prices.