Indonesia’s Grp I base oil exports slump

Indonesia’s Group I base oil exports slid in May to a two-year low at a time when regional prices and Chinese demand were unusually weak.

Base oil exports of 1,530t in May fell from 10,500t the previous month to the lowest since May 2020, government data showed.

Exports have typically averaged close to 5,000 t/month over the past year.

Total base oil exports of 34,900t in the first five months of the year were down 27pc from 47,690t during the same period last year.

The almost-complete halt to base oil exports in May is the kind of trend that takes place when base oil plants are taken offline for maintenance work.

The drop in exports in May came at a time when regional Group I base oil prices have struggled to hold at a premium to diesel prices. Light-grade prices especially have held at a steep discount to diesel prices since March.

The weak base oil prices partly reflected healthy supply availability. The more plentiful supplies in turn partly reflected the slowdown in Chinese demand for products like Group I bright stock.

China is a key outlet for Indonesia’s supplies of the heavy-grade product. There were no Group I exports from Indonesia to China in May for the first time in two years.

Firm lube demand in Indonesia itself also incentivized sellers to maximise sales at higher prices within the country.

There were no base oil exports from the port of Cilacap for the first time in three months. Some 6,000t of supplies had been shipped from the port in April.

Cilicap is home to Indonesia’s Group I base oils plant.

Almost all of Indonesia’s base oil exports were instead shipped from Tanjung Priok. The port is a key outlet for flexibag shipments.

Some 340t of supplies moved to Malaysia in May. The second-largest volume was 250t, which went to Vietnam.