India’s Sept v light-grade imports fall

India’s imports of very-light grade base oils extended their slide in September to the lowest in more than 21 months.

Imports of less than 125,000t in September fell from close to 127,000t in August and from almost 220,000t the same month a year earlier, provisional customs data showed.

The drop in shipments for six straight months cut total imports to 1.38mn t in the first nine months of the year. The volume was down 15pc from 1.62mn t during the same period last year.

India’s base oils imports have fallen steadily in recent months amid a seasonal slowdown in demand and as falling prices prompted buyers to hold back.

The speed of the fall in shipments of very-light grade base oils far outpaced the drop in total imports.

The divergence partly reflected the different end-user markets for different types of base oils.

Demand for more conventional lubricants like engine oils has got support from firmer vehicle sales in recent months. Base oils used to produce engine oils tend to be heavier than very-light grade base oils.

The steeper drop in imports also reflected overseas producers’ incentive to redirect very light grades back into the diesel pool in view of their low price relative to diesel.

The slowdown in shipments also coincided with steady retail diesel prices in India in recent months, combined with rising prices for very-light grade base oils. The trend narrowed sharply the premium of diesel to light-grade base oils.

The diesel premium to base oils widened during the third quarter of the year as regional base oils prices fell sharply. Even the firmer diesel premium remained much lower than levels that it reached last year.

The slowdown in demand for very light grades has curbed options for overseas producers that were seeking outlets for their surplus volumes.

The drop in imports coincided with a slump in Israel’s base oil imports this year. That country had also been an outlet for very light grades.

Mexico’s base oils imports from the US have also fallen this year. The country is also an outlet for very-light grade base oils.