UK’s August base oils exports rise

The UK’s base oils exports rose to a 13-month high in August amid a rise in production and signs of more limited demand in its domestic market.

Base oils exports of 39,110t in August rose from 29,880t the previous month to the highest since July 2021, government data showed.

The rise in shipments was only the second in six months after a sustained slowdown in domestic base oils production this year cut availability for export.

The pick-up in shipments in August followed a recovery in domestic production in July to a five-month high.

The higher volumes left total exports of 242,120t in the first eight months of the year down 5pc from 253,810t during the same period last year.

The contraction narrowed from a 9pc shortfall in the first seven months of the year.

An unusually large portion of the August shipments moved to Africa. The move coincided with a seasonal slowdown in base oils demand in Europe.

Slowing economic growth compounded the slowdown and dampened interest in additional supplies from sources like the UK.

More than 16,000t of base oils moved from the UK to markets like Nigeria and South Africa in August.

Exports to the continent had held below the 10,000t level every month since March, when the UK’s domestic production began its prolonged dip.

Buyers in Nigeria in particular had had to turn to the US for supplies during the first half of the year because of the drop in shipments from sources like the UK.

The UK’s base oils exports exceeded its imports in August for the third time in four months.

Base oil imports of 35,820t in August rose from year-earlier levels for the eighth month in a row. The rise in shipments extended into August even with a recovery in domestic base oils production.

A large portion of the supplies originated from markets like Netherlands and Belgium, which are key sources or distribution points for premium-grade base oils.

The shipments also included a large volume of supplies from South Korea.

Rising imports and domestic consumption of premium-grade base oils had helped to cover for the drop in domestic supplies of Group I base oils this year.

They increasingly showed signs of displacing Group I base oils, leaving the export market as a key outlet for surplus volumes.