India’s September base oils supply shortfall narrows

India’s base oils supply rose to a three-year high in September on the back of a surge in imports and firm domestic output.

Supply still lagged demand in September for a second month, complicating blenders’ moves to build inventories ahead of a seasonal rise in demand from the end of the third quarter.

The dynamic raised the prospect of supporting firm demand for base oils shipments from overseas markets at least at the start of the fourth quarter of the year.

India’s base oils supply, or output and imports combined, rose to more than 530,000 tonnes in September, government and customs data showed.

The volume rose for the eighth time in nine months from year-earlier levels to the highest level since early-2022.

Supply rose mostly because of a rebound in imports to a forty-two-month high, while domestic output held firm.

Supply rebounded from a six-month low in August, when demand was unexpectedly firm.

Strong demand and lower supply squeezed blenders’ stocks at a time of year when they typically rise.

The diverging supply-demand trend in August left blenders with lower inventories ahead of a seasonal rise in consumption from the end of the third quarter of the year.

The pick-up in supply in September helped to replenish those stocks.

An extension of the demand-strength into September slowed any such moves.

Demand, or domestic consumption and exports combined, rose for the ninth time in ten months to more than 580,000 tonnes.

Firm demand left supply lagging consumption for a second month even as the shortfall narrowed.

The persistent shortfall raised the prospect of supporting sustained demand for additional base oils volumes from overseas markets in the fourth quarter of the year.

Demand for additional volumes increased the importance of CFR India base oil cargo prices holding at levels that sustained the incentive for overseas suppliers to move more shipments to the country.