Asia-Pacific base oils exports fell in December to their lowest since first-half 2020 when lockdowns slashed global economic activity.Exports fell this time as refiners cut production in response to low prices and a seasonal slowdown in demand.The drop in exports curbed sellers’ need to slash prices, prevented a regional supply-build and cut back the flow of arbitrage shipments to markets like Latin America.The lower exports also coincided with China’s decision to end its zero-Covid policy and to instead live with the virus.The move is set to increase the size of a seasonal pick-up in base oils demand in the region over the coming weeks.Several refiners in the region responded to the expected pick-up in demand by raising exports in January.The belated rise in shipments may be insufficient to meet the pick-up in demand after buyers held off replenishing stocks.Any rise in shipments is also likely to be capped by a round of plant maintenance work throughout Asia-Pacific over the coming months.The region’s base oils exports of less than 574,000t in December fell from more than 628,000t the previous month and by 20pc from year-earlier levels, government data showed. The volume was the lowest since May 2020..Exports of 1.82mn t in the fourth quarter of the year fell from 2.13mn t during the previous three months to the lowest since the second quarter of 2020.The 15pc size of the fall in supplies was much larger than usual.Exports rose in the fourth quarter of 2021 from the previous three months as producers sought to clear surplus volumes.The additional volumes gave buyers the opportunity to start to replenish stocks ahead of the spring oil-change season in the first quarter of the following year.This time there was no large surplus to clear. The drop in supplies in turn curbed buyers’ opportunity to build stocks.The drop in exports also increased the need for a rebound in supplies during the first few months of this year.The drop in exports in December mostly reflected a slump in supplies from northeast Asia to a 31-month low.The volumes likely recovered in January amid a pick-up in shipments from Taiwan and a rise in South Korea’s base oils production in December.Exports from southeast Asia in December held in a narrow range for a third month. The volume was still much lower than usual..Taiwan’s Dec base oils exports fall
