India’s August base oils imports fall

India’s base oils imports fell in August to their lowest in more than two years as sliding prices and a seasonal slowdown in demand prompted buyers to hold back.

A closed arbitrage for shipments from the US also extended a slump in supplies from that market.

Base oils imports of less than 270,000t in August fell from close to 320,000t the previous month to the lowest since June 2020, provisional customs data showed.

The country’s base oils imports slumped in second-quarter 2020 in response to nationwide lockdowns. They have risen strongly since then in response to a strong recovery in demand, especially since the beginning of this year.

The drop in shipments cut base oils imports in August from year-earlier levels for a fourth month in five, even with strong domestic lube demand.

The sustained slowdown cut total imports to 2.69mn t in the first eight months of the year, down 9pc from 2.95mn t during the same period last year.

The slowdown in shipments in recent months coincided with higher regional base oils prices and lower domestic retail diesel prices in India.

The trend narrowed sharply the premium of retail diesel prices to regional base oils prices.

Imports have tended to rise when the diesel premium is wider and fall when it is narrower.

The slowdown in imports in recent months also reflected a sharp drop in US shipments to India compared with the first four months of the year.

India had provided a useful outlet for surplus US supplies at the start of the year.

The subsequent surge in crude and diesel prices and pick-up in demand in outlets like Europe and Africa closed that arbitrage from the end of the first quarter.

Imports from the US in August fell to their lowest in 28 months.

A sustained fall in Asia-Pacific prices from the start of the third quarter of the year then curbed the attraction of locking in supplies from that region.

Buyers were wary of prices that were likely be even lower by the time the shipments reached India.

A seasonal slowdown in domestic lube demand during the monsoon season curbed further any urgency to procure more supplies.