Japan’s September base oils exports fall

Japan’s base oils exports fell in September to a nine-month low even as the country’s base oils production surged.

The fall in exports came ahead of the closure of one of Japan’s Group I base oils units at end-September.

Base oils exports of 65,500 kilolitres (58,020t) in September fell from 79,800kl the previous month to the lowest this year, government data showed.

Exports of 237,110kl in the third quarter of the year fell by 20pc from the previous three months to the lowest this year.

The recent slowdown in base oils exports contrasted with a surge in shipments from the start of the year, especially to southeast Asia.

Exports of 321,270kl to the region in the first nine months of the year rose by 18pc from the same period last year to a six-year high.

More than 80pc of the volume moved to Singapore.  

The rise in shipments added to a well-supplied market where regional base oils prices struggled to maintain a premium to diesel prices.

The dynamic faced the prospect of changing over the coming months following the permanent closure of Eneos’ 225,000 t/yr Group I base oils plant at Negishi at end-September.

Japan’s base oils exports of 21,050kl to Singapore in September remained relatively high. They were still the lowest in six months.

Singapore’s lower base oils imports from Japan in the four weeks to end-October suggested the slowdown in shipments extended into last month.

Any such structural drop in base oils exports from Japan would cut supplies in key outlets like Singapore and force buyers to turn to other sources to cover their requirements.

Lower supplies also raised the prospect of more balanced fundamentals and base oils prices that reflected that change.