Indonesia’s June Grp I exports stay low

Indonesia’s Group I base oils exports stayed low in June amid firm domestic demand and weak regional prices.

Base oils exports of 3,090t in June more than doubled from 1,530t the previous month, government data showed.

The volume was down from average levels of more than 8,000 t/month in the first four months of the year.

Indonesia’s Group I base oils exports surged in the year to mid-2021 at a time when Asia-Pacific supply was unusually tight and prices unusually high.

The drop in exports since mid-2021 coincided with lower prices and easing supply tightness. The improvement in supply curbed competition among buyers to lock in volumes.

Demand waned further this year as lockdowns in China slowed economic growth and cut base oils and lube consumption in the country.

China is a key outlet for Group I bright stock. Indonesia is a key source of bright stock.

The slowdown in Chinese demand curbed the rise in Asia-Pacific base oil prices compared with other regions.

The more muted price-rise cut refiners’ incentive to produce additional volumes to sell into the export market. It added to the attraction for those refiners to maximise sales in their domestic markets.

The attraction was larger in markets like Indonesia, where strong economic growth has supported rising domestic demand for base oils and lubricants.

There were no export cargoes from Indonesia in June for a second month. Almost all the base oil exports loaded from the port of Tanjong Priok, the country’s key outlet for flexibag shipments.

Exports to China came to less than 40t in June. There had been no exports to China the previous month. Exports to the country had averaged more than 1,700 t/month in the first four months of the year.

The scant volumes bound for China suggested that demand in the country remained weak even after the relaxation of lockdown measures in early June.