India’s base oils supply fell in June as lower imports outweighed a pick-up in domestic output.The drop in supply contrasted with stronger demand, keeping blenders’ inventories under pressure.The tight fundamentals supported firm base oils prices that kept open the arbitrage to attract more supplies from overseas markets.The price-strength extended into the start of the third quarter of the year, even with an expected slowdown in lube consumption during the monsoon season.The dynamic pointed to still-tight fundamentals as buyers began to line up replenishment supplies in preparation for a seasonal rise in demand from the end of the third quarter.India’s base oils output of 115,000 tonnes in June rose from around 106,000 tonnes/month in April and May, government data showed..Output rose following the completion of some plant-maintenance work in May.The rise in output could have been larger but for additional plant-maintenance work that extended through June and into second-half July.The muted rise in output coincided with a drop in base oils imports, mostly because of a slump in shipments from the Middle East.India’s base oils supply, or output and imports combined, duly slipped to around 450,000 tonnes in June, from around 480,000 tonnes during each of the previous three months.Lower supply contrasted with higher demand.Total demand, or domestic consumption and exports combined, rose to more than 525,000 tonnes in June.The volume was the highest in three months and outpaced supply by the largest amount in ten months.Demand faced the prospect of continuing to trend higher, leaving India increasingly reliant on rising imports to cover its requirements.The dynamic increased the importance of the timely start-up of additional base oils production capacity in India in the coming months.Any delay to the start-up of the new capacity would compound the country’s reliance on supplies from overseas markets.The country’s base oils prices so far continued to reflect that ongoing reliance..India’s June base oils imports fall.India’s June lube demand stays high.Base Oil News stories and analyses also available on the ICIS platform
