India’s base oils supply held steady in May as firm imports balanced out lower domestic output amid a round of plant-maintenance work.The firm supply volumes more than matched demand in May for a second month, reversing a sustained shortfall during the first quarter of the year.India’s imported Group II base oils cargo prices maintained a high premium to FOB Asia prices throughout the second quarter of the year even with the improvement in supply.The firm price-premium facilitated the shipment of additional supplies to India even ahead of a seasonal slowdown in consumption in the third quarter of the year.The dynamic raised the prospect of a supply-demand imbalance.It also highlighted India’s ongoing and growing reliance on base oils imports to meet its demand requirements until the start-up of new production capacity.The country’s base oils output of 106,000 tonnes in May was almost the same as the previous month and down from 126,000 tonnes in March, government data showed.Output fell in April and May because of scheduled plant-maintenance work. Some of the maintenance work ended in late-May. Some of the work extended through the month of June.A sustained rise in imports in the three months to May balanced out the impact of lower output.India’s total supply, or output and imports combined, duly held in a 477,000-482,000 tonnes/month range and was up 6% from year-earlier levels during that three-month period..Steady supply contrasted with a slowdown in demand.Total demand, or domestic consumption and exports combined, came to more than 470,000 tonnes in May.The May volume was down 10% from year-earlier levels, with demand in the three months to May down 1% from a year earlier.Even with the drop in consumption, supply barely exceeded demand.But the supply-demand fundamentals stayed more balanced even with the round of plant-maintenance work and contrasted with a large supply-shortfall in the first quarter of the year.India's supply fundamentals should get a boost over the coming months from a recovery in base oils output, as well as the start-up of new production capacity in the fourth quarter of the year.Any further slowdown in demand could then require an adjustment in imports to maintain the more balanced fundamentals..India’s May base oils imports stay high.India’s May lube demand falls
