China’s May base oil exports hold firm

China’s base oil exports stayed higher than usual in May amid increasingly regular moves to offer surplus supplies to overseas markets.

The May supplies included a rare shipment to the US.

Base oil exports of 9,770t in May edged down from 10,990t the previous month, government data showed.

The export volumes were similar to monthly shipments of around 10,000 t/month over the past year. Those supplies in turn contrasted with more typical levels of around 2,500 t/month before 2021.

The rise in shipments this and last year reflected an unusually wide gap between domestic Chinese prices and fob Asia cargo prices, and an even larger gap with US prices. The wide discount incentivized moves to sell domestic supplies to overseas markets.

Shipments this year got a further boost from a sharp slowdown in Chinese demand in the first and second quarters of the year. The imposition of lockdowns in various regions in China slashed consumption at a time of year when it typically peaks.

The drop in demand prompted overseas suppliers to redirect China-bound shipments to other markets. It similarly prompted domestic sellers in China to move more supplies to other markets.

The May shipments included a 4,570t cargo bound for the US. Before May, there had been only one large shipment from China to the US in the past five years.

Almost all of China's remaining May-loading exports moved to southeast Asia.