China’s October base oils imports fall

China’s base oils imports fell in October for the seventh time in eight months, highlighting buyers’ wariness about replenishing stocks even as supply showed signs of tightening.

The drop in imports coincided with low domestic base oils production in October.

The limited supplies left buyers with low inventories ahead of a typical rise in demand ahead of and after the lunar new year holidays from late January.

There were already signs of a pick-up in Chinese base oils imports this month. Such a trend would need to gather pace to cover upcoming requirements.

Base oils imports of 106,250t in October fell from 149,930t the previous month and by 9pc from year-earlier levels, government data showed.

The drop in shipments cut China’s total imports to 1.55mn t in the first ten months of the year. The volume was down 14pc from 1.80mn t during the same period last year and from almost 2.20mn t during the same period in 2020.

China’s base oils imports fell this year in response to a slump in domestic lube consumption as repeated lockdowns in the country compounded a sharp economic slowdown.

Weak domestic demand kept prices under pressure and closed the arbitrage to move shipments to China.

A seasonal pick-up demand in September supported a recovery in base oils imports that month.

The pick-up in shipments failed to extend into October even amid signs of tightening domestic supply.

The low volumes partly reflected the sale of Asia-Pacific cargoes in September to other outlets for shipments that were loaded and sailed in October.

Regional refiners’ priority in recent months had been to clear surplus supplies.

The sustained weakness in buying interest from China had prompted them to target other markets instead like India and the Americas.

Taiwan’s base oils exports to China edged up in October from the previous month. They rose even more to other markets like India.

China’s low base oils imports also reflected signs of lower supplies from South Korea, whose exports fell sharply in October.

Imports of 25,810t from the northeast Asian country fell by more than half from the previous month to the lowest in more than five years.