Taiwan’s May base oil exports recover

Taiwan’s base oil exports recovered in May following refinery production issues the previous month, boosting regional supply at a time when Chinese demand remained unusually weak.

Base oil exports of 40,240t in May rose from a six-month low of 27,930t the previous month, government data showed. The volume was closer to its more typical export levels in recent months.

The unexpected drop in base oil exports in April came at a time of year when regional demand is typically strong as Chinese buyers build stocks to meet a seasonal rise in demand.

The tighter supply-demand dynamics would typically generate a price reaction.

But Chinese demand was unusually muted in April amid widespread lockdowns. The weak demand kept domestic prices under pressure and kept shut the arbitrage to move shipments to the country from Asia-Pacific.

That trend extended into May even as export volumes from Taiwan recovered. The pick-up in shipments gave Chinese buyers the opportunity to top up with any shortfall in supplies from the previous month.

Base oil exports of 10,200t to China in May instead fell even more from an already low 16,200t the previous month.

The sustained slowdown cut Taiwan’s total base oil exports to China to 107,490t in the first five months of the year. The volume was down 30pc from 152,520t the same period a year earlier.

The rise in supplies and weak Chinese demand forced even more shipments from Taiwan to target other markets instead.