India’s Dec Group II imports slide

India’s Group II base oils imports fell in December to their lowest in more than two years amid a slump in shipments from Mideast Gulf and South Korea.

Imports of light and heavy-grade Group II base oils had risen strongly in the first three quarters of last year as the country’s strong economic growth boosted lube consumption.

Imports slowed during the final months of the year as price volatility and the availability of domestic supplies at competitive prices dampened demand for overseas shipments.

Imports also slowed because of a drop in supply.

Supply fell as weak demand and low base oils prices incentivized refiners in markets like South Korea to maintain low run rates.

The trend raised the prospect of importers relying even more on supplies from domestic producers or incentivizing overseas suppliers to move more shipments to India.

The need for additional supplies from overseas producers is likely to be even more pressing over the coming months to cover for a drop in shipments from Taiwan to India.

The country’s Group II base oils imports of more than 56,000t in December fell from more than 77,600t in November to the lowest in more than two years, provisional customs data showed.

The share of light-grade imports was slightly larger than the volume of heavy grades.

Even with the slowdown, India’s total Group II base oils imports of around 993,000t in 2022 rose by 5pc from less than 950,000t the previous year.

The rise in shipments contrasted with a more-than 20pc fall in India’s total base oils imports in 2022.

Group II base oils imports fell during the final months of the year partly because buyers preferred to wait until they were comfortable that prices had bottomed out.

Regional Group II base oils prices slumped from the start of the third quarter of last year. They continued to trend lower late last year and early this year.

Buyers’ concern about a slowdown in economic activity and lube demand added to a reluctance to procure large volumes from overseas markets.

The availability of supplies from domestic producers provided them with a ready alternative.

But buyers continued to procure large volumes of Group II light and especially heavy-grade supplies from Taiwan even during the final months of the year.

The trend reflected the availability of the supplies and their competitive price.

Availability of the supplies is likely to fall over the coming months as more shipments from Taiwan move instead to China.