Taiwan’s Sep base oils exports surge

Taiwan’s base oils exports rose in September to their highest in more than three years even as shipments to China stayed unusually low.

A wave of shipments moved to other markets instead.

Total exports of 61,130t in September rose from 44,810t in August to the highest since April 2019, government data showed.

The volume was up from less than 3,200t in September 2021, when Taiwan’s sole base oils unit was still offline for maintenance work.

The surge in shipments in August and September contrasted with unusually low exports during the second quarter of the year.

Exports of 105,940t in August and September combined were only slightly lower than shipments of 112,340t in the four months to July.

Shipments slowed in the second quarter of the year amid a slump in demand from China as lockdowns in various parts of the country slashed economic activity.

A recovery in demand following the relaxation of lockdown measures was then more muted than expected.

Weak demand kept domestic prices in China under pressure and at a persistent discount to fob Asia cargo prices.

The trend kept shut the arbitrage to China and incentivized term buyers in the country to redirect supplies from Taiwan to other markets instead.

The trend extended into September, even at a time when Chinese base oils demand typically enjoys a seasonal boost.

Taiwan’s base oils exports of 9,360t to China edged down from 11,120t in August and from more typical volumes of more than 25,000 t/month in the first quarter of the year.

The lower shipments cut Taiwan’s share of exports bound for China to little more than 15pc of the total. China had been the destination for more than 60pc of Taiwan’s exports in 2021.

Weak Chinese demand forced the redirection of shipments from Taiwan to other markets instead. The move added to regional supply and to downward pressure on prices.