Asia’s January exports to China fall

Base oil shipments to China from key producers in Asia-Pacific fell in January as buyers held off replenishing stocks until after the lunar new year holidays.

The move to delay procurement plans added to uncertainty about the strength of a revival in Chinese demand following the scrapping of its zero-Covid policy in December.

A strong rebound in demand would help to absorb more base oils supplies from Asia-Pacific refiners and cut surplus supplies for other regions.

A weak rise in demand would leave Asia-Pacific producers facing the prospect of a persistent surplus to clear or run-cuts to limit the size of the surplus.

Domestic Chinese prices rose at the beginning of February as activity revived after the lunar new year holidays. Prices remained rangebound since then, suggesting the rise in demand was limited.

South Korea, Taiwan, Singapore, and Japan typically account for 75-80pc of China’s base oils imports.

Exports of less than 95,000t from those markets to China in January fell from an eight-month high of 120,000t the previous month, government data showed.

The volume was down from around 142,000t the same month a year earlier and closer to shipment levels during second-half 2022.

Chinese base oils imports slumped during that period as frequent lockdowns throughout the country slashed economic activity and lubricants consumption.

China’s base oils imports would need to rise sharply over the following months to just match year-earlier levels.

There were signs of a rise in shipments in February from January.

But the volumes remained below year-earlier levels from sources like Singapore and Taiwan.

Shipments remained lower even with plant shutdowns in China in February and with domestic blenders holding off moves to replenish stocks until after the lunar new year holidays.

The lack of a more significant rise in shipments to China suggests lube demand remains at levels that deter blenders from building larger stocks.

China typically publishes its trade data at the end of each month.

It is set to publish its January and February trade data together in late-March to smooth out the impact of lunar new year holidays that fall at a different time each year.