China’s May base oil imports extend fall

China’s base oil imports extended their slide in May at a time when key economic centres in the country faced strict lockdown restrictions.

Base oil imports of 138,420t in May fell from an already low 154,080t the previous month to the lowest since October 2021, government data showed.

Total imports of 954,120t in the first five months of the year fell by 12pc from 1.09mn t during the same period last year.

China’s base oil imports slumped at a time of year when they typically peak to meet a seasonal rise in lube demand.

That rise in lube demand has been at best postponed because of lockdowns in China in April and May that included the key commercial city of Shanghai.

China’s base oil imports had already begun to slow sharply well before those lockdowns began.

Imports had already fallen from year-earlier levels in eight of the nine months to January this year, before the imposition of lockdown measures in Shanghai from end March.

Imports had slowed late last year partly because buyers preferred to hold back while regional base oil prices were falling during second-half 2021. China’s industrial production growth also slowed during that period, when the country faced power supply issues.

Domestic base oil supply was also increasingly plentiful. Competitive prices for these supplies and uncertainty about demand and overseas prices added to the attraction of the domestic supplies.

Those factors have remained attractive in recent months as domestic blenders have sought to manage their stocks and procurement requirements amid uncertainty about sudden changes in demand.