UK’s July base oils imports extend rise

The UK’s base oils imports rose in July for a seventh month to cover for a drop in domestic production and signs of growing demand for premium-grade base oils.

Base oils imports of 29,180t in July fell from 33,660t the previous month to the lowest since last December, government data showed.

Imports fell from June amid a dip in shipments from the US and Belgium.

Imports were up 4pc from year-earlier levels, boosting total shipments to 240,650t in the first seven months of the year.

The volume was up 24pc from 193,810t during the same period last year.

The rise in imports coincided with a smaller 8pc drop in the UK’s base oils exports to 203,010t in the first seven months of the year.

The rise in imports helped to cover for a 25pc drop in the UK’s domestic base oils production in the first half of year.

Most of the UK's domestic production consists of Group I base oils.

A growing share of the UK's base oils imports consisted of supplies originating from the US and Netherlands. Both of those markets are key sources of premium-grade base oils.

The July imports also included an unusual 4,200t cargo from South Korea. The shipment highlighted the open arbitrage from the Asia-Pacific market to Europe.

The UK’s base oils exports fell less steeply than the size of the drop in domestic production.

A growing share of the exports moved to Europe. Group I supply has been tighter than expected in that market because of plant maintenance work in Italy and a drop in supplies from Russia.

The trend pointed to a steady rise in domestic consumption of premium-grade base oils in the UK and shrinking demand for Group I supplies.

The dynamic suggested that the UK’s base oils imports could hold at firmer levels even if and when domestic production rises to more typical levels.

Such a trend would also free up more Group I supplies for Europe, which is unlikely to see a revival in shipments from Russia anytime soon.