Indonesia Oct Grp I base oils exports stay low

Indonesia’s Group I base oils exports stayed low in October for a sixth month as weak regional prices and strong domestic demand curbed the attraction of overseas shipments.

Exports of 2,640t in October held below the 3,000t level for the fifth time in six months, government data showed.

The drop in shipments for the eighth time this year cut the country’s total Group I exports to 47,200t in the first ten months of the year.

The volume was down 26pc from almost 64,000t during the same period last year.

The rise in Group I exports in first-half 2021 had limited impact on surging prices during that period.

The drop in exports this year similarly had limited impact on regional price weakness.

Asia-Pacific Group I base oils cargo prices steadied in the fourth quarter of the year after falling sharply during the previous three months. But they remained low relative to crude and especially diesel prices.

Prices remained weak even with low Group I exports from Indonesia and a slowdown in shipments from Thailand in October because of plant maintenance work.

The price weakness partly reflected still weaker-than-usual demand from China for products like bright stock.

Signs of slowing economic growth and lube demand in markets like Thailand added to the pressure on prices.

Weak overseas demand and prices cut the attraction of targeting the region with more supplies and contrasted with firm domestic consumption in Indonesia.

The healthy demand absorbed more of the country’s Group I base oils and kept supplies at manageable levels. The balanced inventories removed the need to clear surplus volumes through the export market.

Exports in October continued to consist of flexibag supplies rather than cargoes. Prices for these shipments are at a steep premium to cargo prices.

Southeast Asia, and especially Malaysia, remained the destination for most of the supplies.