Taiwan ships more base oils to US

Taiwan’s base oil exports in June included another cargo to the US, adding to a growing wave of trans-Pacific shipments this year.

Taiwan’s base oil exports slumped in June to a nine-month low of little more than 23,000t. But the volume still included a 2,020t cargo for the US.

The US-bound cargo was the third this year and the fourth in the last 10 months. Before last September, the most recent shipment to the US had been in mid-2019.

The sustained pick-up in shipments to the US partly reflected an open arbitrage to that market, where Group II prices were at a steep premium to Asia-Pacific prices.

The open arbitrage has also prompted other Asia-Pacific producers to move more shipments to the Americas market.

The rise in Taiwan shipments to the US also reflected moves to diversify supplies away from China. The country is the largest outlet for base oil shipments from Taiwan.

That reliance comes with risks.

Any slowdown in Chinese demand leaves Taiwan struggling to find alternative outlets for its cargoes, often at short notice.

China’s lockdowns this year have triggered a prolonged and steep drop in demand for base oils from Asia-Pacific suppliers, including Taiwan.

The slowdown has prompted signs of lower base oils production in Taiwan as well as moves to ship more cargoes to other markets like India, southeast Asia and the US.