India’s July base oils imports stay low

India’s base oils imports stayed low in July as a seasonal slowdown in lube consumption gave buyers the leverage to hold off replenishing stocks.

Base oils imports of 318,200t in July edged up from 307,780t the previous month, provisional customs data showed.

Imports were still down 22pc from year-earlier levels and the second lowest in the last six months.

The lower shipments cut India’s total base oils imports to 2.42mn t in the first seven months of the year. The volume was down 6pc from 2.56mn t during the same period last year.

India’s base oils imports slowed this year even as the country’s lube demand rose strongly amid healthy economic growth.

The disconnect reflected a combination of healthy supply from domestic base oils producers, low retail diesel prices relative to crude and base oil prices, and a closed arbitrage from the US in recent months.

India’s base oils production rose by 10pc in the first half of the year from year-earlier levels amid strong demand and healthy margins, especially relative to diesel.

Retail diesel prices rose less steeply than crude oil prices in the first half of the year.

Regional base oils prices rose faster than crude in the second quarter. The disconnect left base oils prices relatively high compared with diesel.

Importers’ ability to procure sufficient supplies from Asia-Pacific also curbed the need or attraction of seeking supplies from the US at higher price levels.

Expectations that imported base oils prices would fall as availability of supply improved in the third quarter of the year added to buyers’ preference to hold back from procuring supplies for July.

A seasonal slowdown in domestic lube demand in July gave buyers additional leverage to slow their procurement activity.