China’s July base oils imports slump

China’s base oils imports slumped in July to their lowest in more than five years amid a sustained slowdown in the country’s lube consumption.

Base oils imports of 88,250t in July fell from an already low 154,030t the previous month to the lowest since before 2017, government data showed.

The volume contrasted with typical imports of more than 177,000 t/month in 2021.

The drop in shipments for a fifth straight month cut China’s base oils imports to 1.20mn t in the first seven months of the year.

The volume was down 16pc from 1.42mn t during the same period a year earlier and the lowest in years.

Base oils imports slumped even after the country began to relax pandemic-related restrictions from early June in key commercial regions like Shanghai.

The relaxation of the restrictions raised expectations of a revival in base oils and lube consumption as economic activity revived.

China's car sales have rebounded since June after slumping in April and May.

The automobile sector got a boost from government stimulus measures and a growing preference for private vehicle usage over public transport.

Beyond that sector, the economic recovery was muted. The country’s industrial production grew less than expected in July and at a slower pace than the previous month.

China’s base oils imports had surged in the second quarter of 2020 after the relaxation of the first round of Covid-19 lockdown measures as economic activity rebounded.

The surge in demand absorbed a swathe of surplus Asia-Pacific supplies and helped to trigger a rebound in prices.

That pattern failed to repeat itself this time.

Asia-Pacific producers instead had to continue to seek more alternative and more distant outlets to absorb their surplus supplies.

Waning demand in more of those markets and rising competition from other sources forced refiners to cut price offers to attract buyers.