India’s base oils supply edged lower in April as firm import volumes balanced out a dip in domestic production.Relatively steady supply contrasted with a fall in demand, triggering a rise in surplus supplies to a two-year high.India’s increasingly firm base oils cargo prices versus FOB Asia prices in the second quarter pointed to ongoing demand even with the rise in surplus supply.The dynamic pointed to various factors supporting that ongoing buying interest.India’s base oils output of 107,000 tonnes in April fell from more than 125,000 tonnes the previous month, government data showed.Lower output coincided with scheduled plant maintenance work during the month that extended through May.It also coincided with a rise in base oils imports in April to an eleven-month. The higher imports almost fully balanced out the drop in production.India’s base oils supply, or output and imports combined, duly edged back below the 480,000 tonne-level in April.Supply had risen above that level in March for the first time in ten months. Lower supply contrasted with a slump in India’s domestic lube demand in April to a nine-month low of less than 325,000 tonnes.Supply duly exceeded demand for the first time in five months and by the largest volume in two years..The rising surplus coincided with lower crude oil prices and preceded a typical seasonal slowdown in demand during the monsoon season that began in recent days.Lower crude oil prices increased buyers’ exposure to the risk of lower prices for their stocks.Lower lube demand increased the risk of those stocks lasting longer.The premium of India’s imported Group II base oils cargo price over FOB Asia prices instead widened further during the second quarter of the year.The wider premium pointed to ongoing buying interest by facilitating the arbitrage to move more supplies to India.The disconnect between rising surplus supplies, rising demand for additional volumes and weaker lube consumption pointed to other factors supporting the ongoing buying interest.Plant maintenance work in India and Iran had a disproportionate impact on availability of heavy-grade base oils.India’s imports of Group I heavy neutrals fell to a four-month low in April, reflecting that dynamic.Tighter supply in turn supported ongoing demand for additional volumes.That support for extra cargoes could ease in the coming weeks following the completion of plant maintenance work in India and the Middle East..India’s April lube demand falls .India’s April base oils imports rise.India’s April heavy-grade imports fall
