China’s October base oils exports fall

China’s base oils exports fell to a three-month low in October following a surge in shipments during the previous two months.

The lower export volumes coincided with signs of tighter base oils supply in China’s domestic market amid persistently low production and imports that outweighed steadier demand.

Exports showed signs of staying lower in November.

Singapore’s four-week average import volume from China held so far in November at its lowest level in more than three months.

The island-state is typically the destination for most of China's exports.

Total base oils exports of 8,870t in October fell by more than half from 18,000t the previous month and from more than 38,000t in August, government data showed.

The August and September volumes were unusually high and highlighted the weakness of domestic demand during most of the third quarter.

The shipments cleared a large surplus even with low domestic base oils production.

Relatively high overseas prices compared with domestic prices in China added to the attraction of exporting surplus supplies.

The October exports were closer to average monthly volumes in 2021 and first-half 2022.

The lower volumes followed a sustained rise in domestic Chinese prices in recent months and especially in October. Prices rebounded as the country’s supply-demand fundamentals tightened.

The higher prices and tighter fundamentals cut availability and curbed the incentive to move shipments to overseas markets.

The slowdown in China’s October shipments mirrored a similar trend among other major suppliers in Asia-Pacific such as South Korea and Taiwan.

The slowdown in shipments similarly balanced the region’s supply-demand fundamentals and eased pressure on prices.

Singapore remained the destination for the largest volume of supplies from China in October.

Russia was the second-largest destination. There had been scant shipments from China to Russia before July.

Exports to Russia rose strongly since then, with another 1,520t moving to the country in October.

Russia typically exports surplus Group I base oils and imports premium-grade supplies.

The trend suggested that the Chinese shipments to Russia were more likely to be premium grades rather than Group I base oils.