Shortfall widens to largest in sixteen months
Simultaneous fall in output and imports magnify drop in supply
Shortfall keeps blenders' stocks tight, sustains demand for additional volumes
India’s base oils supply lagged demand in October by the widest margin in sixteen months, as a simultaneous dip in domestic output and imports collided with firm consumption.
Total supply, or domestic output and imports combined, fell to under 440,000 tonnes in October, down sharply from more than 530,000 tonnes in September, government and customs data showed.
Planned plant-maintenance work in India and in Saudi Arabia likely kept supply lower last month and increased the need for additional shipments from other markets.
Any such pick-up in shipments still left blenders struggling to meet the sustained rise in demand rather than replenishing low stocks.
Total demand, or domestic consumption and exports combined, held above 500,000 tonnes for a third month and extended its year-on-year growth for a fourth month.
The supply shortfall duly widened to its largest since mid-2024, keeping blender inventories tight and reinforcing the need to secure additional replenishment volumes.
India’s base oils price dynamics reflected the imbalance. Premiums to FOB US and Asia prices held at levels that kept open the arbitrage to move more shipments to the country.
But falling outright base oils prices in recent weeks complicated the line-up of such shipments as buyers faced the risk of even lower values by the time the cargoes arrived.
The expected start-up of new production capacity in India in the coming weeks could also incentivize blenders to keep lean stocks.
Those factors could keep inventories lower for longer, amplifying the impact of any unexpected supply disruptions or persistent demand strength.
