India’s imports of very-light grade base oils rose to a three-month high in January on the back of a pick-up in shipments from regular sources like the Mideast Gulf and less regular suppliers like US.Imports rose from a more-than-two-year low in December and remained much lower than volumes in 2021 and first-half 2022.They are likely to remain around those lower levels over the coming months amid more muted demand for the supplies for other purposes besides lubricants production.Imports of very-light grade base oils came to around 125,000t in January, up from less than 92,000t the previous month, provisional customs data showed..The volume was similar to average imports of 125,000 t/month in second-half 2022. It remained well below average volumes of around 165,000 t/month in the first half of last year and almost 200,000 t/month in 2021.The high import volumes in 2021 and early 2022 had coincided with unusually high domestic retail diesel prices relative to regional light-grade base oils prices.The drop in imports coincided with a sharp narrowing of the diesel premium to base oils from the second quarter of last year.The diesel premium to very light grades recovered in January to its highest in nine months.Demand could get further support from expectations that regional prices for the product had likely bottomed out.Steadier prices would cut buyers’ risk of exposure to the falling value of imports and inventories. The possibility of higher prices would incentivize buyers to lock in supplies at current lower price levels.Overseas base oils producers typically cut production of very-light grade base oils when their premium to diesel gets too narrow. They produce more diesel instead.Forecasts of higher crude oil prices over the coming months, and a subsequent rise in diesel prices, would incentivize refiners to either cut production or raise prices for very-light grade base oils.India’s January imports got a boost from a rebound in shipments from Saudi Arabia and Qatar.Imports of very light grades from the US also rose in January to a seven-month high following the arrival of an arbitrage cargo..US’ December base oils exports slump
