Indonesia July Group I exports stay low

Indonesia’s Group I base oils exports stayed low in July amid healthy domestic consumption, low overseas prices, and weak Chinese demand.

Base oils exports of 2,860t in July edged down from 3,090t the previous month, government data showed.

The lower shipments cut total exports to 40,860t in the first seven months of the year. The volume was down 25pc from 54,670t during the same period last year.

The low volume of Indonesia’s Group I base oils exports has become increasingly common over the past year because of a combination of rising domestic lubricants consumption and weak buying interest from China.

The lower volumes contrasted with a surge in exports in the year to June 2021. Regional prices were unusually high and pandemic-related measures cut domestic demand during that period.

Heavy-grade bright stock typically accounts for a large share of Indonesia's Group I exports. China has typically been a key outlet for those supplies.

There were no cargo shipments to China in July for a fourth straight month. Weak demand and low domestic prices in China made the arbitrage unworkable during that period.

Asia-Pacific bright stock prices moved to a discount to domestic Chinese prices in recent weeks for the first time since April.

The trend began to make the arbitrage to China more feasible again.

But the change reflected more the recent weakness of Asia-Pacific prices than a rise in Chinese prices.

That price weakness, combined with firm domestic demand in Indonesia, increased the attraction of keeping more of the supplies within the country.

The weakness in Chinese demand contrasted with the relative strength of buying interest in southeast Asia.

More than 70pc of Indonesia’s base oils exports moved to outlets within the region in July for the third time in four months.

The shipments were small and mostly loaded from the port of Tanjung Priok, the key port for flexibag supplies.

There were no shipments in July from Cilacap for a third month. Cilacap is the main port for cargo shipments.