Taiwan’s Dec base oils exports fall

Taiwan’s base oils exports fell to a five-month low in December, adding to signs of a smaller regional supply overhang heading into the new year.

Most of its shipments moved to China in December, cutting further the availability of surplus volumes for other markets.

The drop in availably followed lower-than-usual base oils exports from key sources like South Korea, Singapore and Indonesia in October and November.

The trend left the Asia-Pacific market better balanced at the start of the new year and ahead of an expected pick-up in Chinese demand following the removal of most of its Covid-related restrictions.

Taiwan’s base oils exports of 26,390t in December fell by more than half from 60,840t the previous month, government data showed.

The volume was the lowest since July.

More than half the supplies consisted of light-grade base oils.

Even with the slowdown, exports of 474,460t in 2022 rose by 23pc from 386,280t the previous year.

The surge in last year’s base oils exports coincided with an unexpectedly steep slump in Chinese demand.

China is typically the largest outlet for Taiwan’s base oils shipments.

The trend repeated itself throughout Asia and left regional producers with a large volume of surplus supplies to clear in other markets.

Asia-Pacific base oils prices fell to steep discounts to prices in other regions to facilitate those moves.

More balanced supply at the end of last year and the prospect of stronger Chinese demand this year was likely to curb the volume of supplies available for other markets.

The trend showed signs of already beginning at the end of last year.

Taiwan’s base oils exports to China fell back to 20,440t in December, from more than 28,000t the previous month.

But the volume accounted for more than 75pc of Taiwan’s total base oils exports.

The share was the highest in more than two years and up from less than 30pc of the total in the second and third quarters of last year.