Taiwan’s Aug base oils exports recover

Taiwan’s base oils exports rebounded to a six-month high in August even as a recovery in demand from China remained weak.

Base oils exports of 44,810t in August rose from less than 24,000t in June and in July, government data showed.

Exports of 281,380t in the first eight months of the year were up 8pc from 260,250t during the same period last year.

Taiwan’s base oils exports are typically around 40,000 t/month. Shipment volumes have tended to dip below that level because of plant maintenance work, run cuts or other factors such as weak Chinese demand.

Last year’s lower volumes reflected the impact of extended plant maintenance work.

This year’s slump in base oils exports in June and July reflected lower run rates and unexpectedly weak Chinese demand, even after the relaxation of lockdown measures in key commercial centres like Shanghai.

Chinese demand improved in August ahead of a typical seasonal pick-up in lube consumption from second-half September.

Domestic Chinese base oils prices were relatively steady in August even as fob Asia cargo Group II prices fell sharply. The trend cut the discount of domestic Chinese prices to fob Asia cargo prices to its narrowest in more than five months.

Taiwan’s base oils exports to China recovered to 11,120t in August, reflecting the improvement in Chinese demand.

Shipment volumes were up from close to 5,000t the previous month and less than 3,000t in June.

But the recovery was relative.

Taiwan’s base oils exports to China had typically been at least 20,000-30,000 t/month. Before 2020, the country had been the outlet for more than 70pc of Taiwan’s monthly exports.

China’s domestic price discount to fob Asia Group II prices narrowed sharply in August. But it remained at a discount.

The price dynamic continued to deter Chinese term buyers that sought to avoid locking in losses for imported supplies. They preferred to redirect the shipments to other markets instead.