India’s December base oils imports fall

India’s base oils imports fell in December to the lowest in more than two years amid a slowdown in shipments from the Mideast Gulf and South Korea.

Imports would have fallen even more but for a rebound in shipments from Taiwan and Spain.

Firm domestic base oils production in India provided buyers with a competitive alternative source of supplies.

But output levels were insufficient to cover for the size of the drop in base oils imports and firm domestic lube demand.

Importers now the faced the prospect of increased competition for regional supplies as a recovery in Chinese consumption coincided with a seasonal rise in demand in southeast Asia.

India's base oils imports of less than 200,000t in December fell from more than 250,000t the previous month, provisional customs data showed.

The volume was the lowest since May 2020, when nationwide lockdowns to curb the spread of the Covid virus slashed base oils and lube consumption.

The drop in shipments for a sixth month cut India’s total imports to 3.66mn t in 2022. The volume fell by 21pc from 4.63mn t the previous year to the lowest since 2019.

Last year's slump in base oils imports coincided with a strong economic recovery that boosted lubricants and base oils consumption.

Falling regional base oils prices in recent months and concern about slower economic growth prompted some blenders to hold off procuring more supplies from overseas markets.

The room for any further drop in base oils prices is likely to be limited.

Any slowdown in economic growth would coincide with a seasonal rise in lubricants sales in the first quarter of the year before financial year-end at end-March.

Additional base oils availability from domestic producers was likely to be limited until new production capacity comes online.

The country also faced the prospect of a slowdown in shipments from sources like Taiwan, whose exports to India slumped in December.

Any such slowdown would follow a surge in shipments from Taiwan throughout the second half of last year.

Imports from Taiwan came to more than 15,000t in December and averaged more than 19,000 t/month since last June.

The volume was up from imports of less than 6,000 t/month in the year to last May.

A revival in Chinese demand raised the prospect of a rise in Taiwan’s shipments to that market instead.