Taiwan Jan exports rise to India, SE Asia

Taiwan’s base oils exports to India and southeast Asia rebounded in January as a slowdown in Chinese demand boosted the attraction of moving supplies to other markets.

Chinese base oils demand was expected to revive early this year on the back of a pick-up in economic activity following the scrapping of its zero-Covid policy.

Domestic blenders in China also had to replenish stocks after they held off such moves late last year.

The revival in demand showed signs of materializing, but in February rather than January.

Falling domestic Group II base oils prices in China in December instead made the arbitrage harder to work and boosted the attraction for Asia-Pacific producers to move more shipments to other markets.

They did just that, with a rise in shipments to southeast Asia and India.

The subsequent round of stock-replenishment in southeast Asia could curb blenders’ requirements over the coming weeks.

The lack of stock-replenishment in China was likely to boost demand in that market instead.

Taiwan’s base oils exports of more than 27,000t to southeast Asia and India combined in January rose from less than 6,000t the previous month, government data showed.

The volume was the highest in four months.

A swathe of shipments from Taiwan had moved to both markets in 2022, especially in the second half of the year.

Shipments moved to those markets instead of to China, where demand had been unusually weak.

The persistent availability of the additional cargoes added to the supply-overhang in Asia and kept downward pressure on prices.

The flow of supplies from Taiwan to India and southeast Asia is likely to fall this year because of a revival in Chinese demand.

The surge in shipments to those two markets in January highlighted the repercussion of a weaker-than-expected pick-up in demand in China.

Taiwan's January exports also included a cargo to the US for the first time in three months.

The trend raised the prospect of a repeat of those flows to other markets in response to any further weakness in Chinese demand over the coming months.