India’s June base oil imports fall

India’s base oil imports fell in June to a one-year low as high prices dampened buying interest.

Base oil imports of around 306,000t in June fell from close to 333,000t the previous month, provisional customs data showed.

The volume was down from typical levels of more than 380,000 t/month over the past year.

India’s base oil imports typically fall in the month of June, when the monsoon season usually begins and lube consumption slows.

Importers seek to manage inventories carefully in anticipation of the slowdown in demand. The slower demand also gives them more leverage to put off plans to procure supplies if they deem prices to be unattractive.

Asia-Pacific base oil prices had surged during the preceding months to levels that triggered growing resistance from buyers.

Prices had risen mostly in response to the sharp rise in global crude and diesel prices.

India’s domestic retail diesel prices rose more slowly than global prices and regional base oil prices.

High retail diesel prices in India relative to light-grade base oil prices have typically coincided with stronger base oils demand.

Buying interest has been weaker when retail diesel prices have been lower relative to base oil prices, as they have been in recent months.

The combination of high outright base oil prices and their price strength relative to domestic retail diesel prices added to Indian buyers’ preference to hold back. They instead preferred to cover more of their requirements with supplies from domestic sources.