India’s Feb base oils imports rise

India’s base oils imports rose to a four-month high in February as rising shipments from Asia-Pacific countered a slump in supplies from the Mideast Gulf and US.

The rise in shipments from Asia-Pacific pointed to a pick-up in demand from term buyers ahead of a seasonal rise in India’s lube consumption in the month of March.

It also reflected a rebound in Asia-Pacific base oils supply from late last year and weak Chinese demand in the month of January. More shipments were redirected to outlets like India instead.

Firmer Chinese demand from the month of February raised the prospect of curbing the volume of supplies from Asia-Pacific to other markets in the following months.

Steady demand in Latin America and more limited arbitrage opportunities from the US also curbed the flow of shipments from that market to India.

Buyers would need to rely more on supplies from domestic producers and from the Mideast Gulf in response.

India’s base oils imports of close to 260,000t in February rose from less than 240,000t the previous month, provisional customs data showed.

The volume was the highest since last October. But it fell from year-earlier levels for an eighth straight month.

Base oils imports slumped during that period even as India’s strong economic and industrial growth supported rising lube consumption.

Buyers covered more of their base oils requirements with supplies from domestic producers instead.

The unusually competitive prices for the supplies complicated overseas producers’ willingness to attempt to compete with the price levels.

Buyers also slashed requirements for overseas supplies of very-light grade base oils.

The gradual improvement in imports in the first two months of this year coincided with plant maintenance in India in February and preceded a typical seasonal rise in lube consumption in the month of March.

Imports in February also got a boost from a rebound in shipments from Taiwan and China.

The rise in supplies from those markets reflected China’s weak demand in January and producers’ need to find alternative outlets for their supplies.

The moves mirrored a similar trend throughout much of last year.

The end of China’s zero-Covid policy at end-2022 raised expectations of a slowdown in such shipments.

The reality is more likely to be a pattern similar to the first two months of this year, with sporadic waves of shipments depending on the strength of Chinese demand.