China’s Nov base oils imports stay low

China’s base oils imports stayed unusually low in November as persistent lockdowns throughout the country deterred buyers from building stocks.

The removal of a swathe of pandemic-related restrictions in China in early December raised the prospect of spurring a revival in demand.

Buying interest remained weak for now as a surge in infections rates in the country pushed back the timing of a recovery in demand and any moves to replenish stocks.

The lack of base oils stock-building ahead of the lunar new year holidays in late January raised the prospect of a seasonal rise in demand squeezed into a shorter time period after the holidays.

Sudden surges in demand in previous years triggered sharp price reactions in the Asia-Pacific market.

China’s base oils imports of 127,510t in November rose from less than 110,000t the previous month, government data showed.

The volume held below the 150,000t level for a fifth month and fell from year-earlier levels for the eighth time in nine months.

The slowdown cut the country’s total imports to 1.67mn t during the first eleven months of the year.

The volume was down 15pc from 1.97mn t during the same period last year and from more than 2.37mn t during the same period in 2020.

China’s muted base oils demand left a persistent supply-overhang in the Asia-Pacific region throughout the year.

Regional base oils prices fell to levels that made the arbitrage feasible to move the surplus to other markets like Mideast Gulf and the Americas.

The trend was set to continue at least until the start of 2023.

The impact was likely to be more muted amid signs of a widespread slowdown in base oils production and exports in the region during the fourth quarter of the year.

The smaller surplus would then coincide with a likely pick-up in Chinese demand after the lunar new year holidays.