India's July light-grade imports stay low

India’s imports of very-light grade base oils stayed unusually low in July amid a sustained slowdown in demand.

Total imports rose to more than 134,000t in July, up from less than 130,000t the previous month, provisional customs data showed.

The volumes were the lowest in more than 19 months and down from typical levels of close to 200,000 t/month in 2021.

Imports fell even as India’s lube demand held firm this year on the back of healthy economic growth.

The slowdown coincided with a sustained rise in crude oil and diesel prices since the third quarter of last year and a surge in prices from late February.

The recent drop in crude prices left them close to the February levels.

The higher crude and diesel prices triggered a rise in global base oils prices as producers passed on higher feedstock costs.

India’s retail diesel prices also rose during the same period for similar reasons. But they rose less sharply than crude and regional base oils prices.

The premium of retail diesel prices to regional light-grade base oils prices fell sharply in response. The lower premium coincided with the drop in base oils imports.

The trend contrasted with unusually high retail diesel prices relative to base oils prices throughout most of last year. The period coincided with unusually high imports of very-light grade base oils.

Buyers’ expectations that base oils prices would fall added to the drop in demand for light-grade base oils. A seasonal slowdown in lube demand during the monsoon season also curbed any urgency to buy.

The import volume in July got a boost from a surge in supplies from Qatar. The shipments countered a drop in flows from South Korea and the US.