Asia’s Nov base oils exports stay low

Base oils exports from Asia-Pacific stayed unusually low in November for a second month, curbing a build-up of surplus supplies before the start of the new year.

Asia-Pacific base oils prices have been firmer relative to diesel and relative to other regions since the fourth quarter of last year, reflecting the more balanced supply.

The sustained slowdown in exports also coincided with signs of a pick-up in shipments to China even before the country’s relaxation of its Covid-related restrictions from early December.

Export volumes showed signs of staying lower or falling further in December from markets like Taiwan and Singapore.

Lower base oils exports and a pick-up in flows to China raised the prospect of curbing surplus volumes for other markets like India and Mideast Gulf.

More balanced fundamentals would also boost competition for supplies within the Asia-Pacific market.

The region’s base oils exports of 620,100t in November rose from a fourteen-month low of less than 608,000t in October, government data showed.

The October volume had been the lowest since the third quarter of 2021. The November volume was the second lowest.

The drop in exports in October and November contrasted with average shipments of more than 695,000 t/month in the first nine months of the year and more than 750,000t in September.

The September shipments removed from the region a large volume of surplus supplies that had weighed on Asia-Pacific prices.

The drop in exports since then countered the impact of still-weak Chinese demand and curbed the build-up of surplus supplies during the final weeks of last year.

The lower exports partly reflected the impact of plant maintenance work in southeast Asia.

Some producers also likely trimmed refinery run rates and boosted middle distillates output instead.

A smaller supply surplus at the start of the new year, and the prospect of a revival in Chinese demand later in the first quarter, gave refiners more leverage to maintain the prices that they were targeting.

It also curbed their need to clear surplus volumes in more distant markets like the Americas.