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Taiwan's base oils exports fell to a 30-month low in June, adding to signs of tightening supply from Asia's major export hubs
Taiwan's first cargo to the US since January 2023 followed a shipment to Europe in May, showing sellers working unusually attractive arbitrage opportunities outside Asia
The combined and ongoing weakness from Taiwan and Singapore pointed to a smaller Asia supply surplus in the third quarter
Taiwan's base oils exports fell to a 30-month low in June, adding to weak Singapore shipments and narrowing Asia's supply surplus.
Exports fell to close to 25,000 tonnes in June from more than 49,200 tonnes in May, Customs Administration data showed.
The volume was the lowest since December 2023, when exports were still recovering from scheduled maintenance work at the end of that year.
The June slowdown capped a weaker second quarter.
Quarterly exports fell to 107,000 tonnes, from more than 147,000 tonnes in the first quarter and the lowest since the second quarter of 2024.
The slowdown added to a more constrained regional supply picture.
Singapore's exports also remained unusually weak in May and June, leaving two of Asia's largest export suppliers shipping well below typical levels.
The combined slowdown, along with the slump in premium-grade inflows from the Middle East, pointed to a smaller regional surplus despite softer seasonal demand at the start of the third quarter.
Key Highlights
June exports fell to around half their average monthly level during the previous year.
The destination mix shifted, with second-quarter shipments to China and India falling to multi-quarter lows, while exports to Southeast Asia remained comparatively resilient.
Taiwan shipped its first cargo to the US in more than two years, extending moves to target higher-priced export markets beyond Asia.
Exports remained subdued during the first half of July as factors including typhoon-related disruptions delayed cargo loadings.
Market Repercussions
The simultaneous slowdown in exports from Singapore and Taiwan showed how the Middle East disruption continued rippling through Asia's supply chain even as outright demand weakened.
Continuing uncertainty over feedstock availability in Singapore, along with unexpected production issues and planned maintenance at plants in Asia over the coming months, pointed to a market that remained structurally tighter than before the Middle East disruption.
The emergence of Taiwan cargoes into Europe and the US showed suppliers working the arbitrage into markets where prices were at a steep premium to Asia levels.
The size of the shipments was unlikely to shift supply conditions in destination markets but provided producers with additional outlets to clear surplus volumes.
The combination pointed to a smaller-than-usual Asia surplus through the third quarter. Demand typically strengthens from August, while supply remained exposed to feedstock disruptions, maintenance and stronger export arbitrage.
