Indonesia’s Dec Group III exports fall

Indonesia’s Group III base oils exports fell to a four-month low in December, prolonging a sustained slowdown in shipments of the premium-grade product.

There were no exports to the Netherlands for the first time in nine months.

The slump in shipments in the fourth quarter of the year coincided with Group III base oils plant maintenance work in Europe and the Mideast Gulf and a sustained slowdown in exports from South Korea.

The tighter supplies and steady demand supported increasingly firm Group III base oils prices relative to other grades.

Supply from Europe and the Mideast Gulf improved from December. But the ongoing slowdown in shipments from Indonesia raised the prospect of keeping availability tighter than usual.

There were signs of a pick-up in shipments from the country in January.

Indonesia’s premium-grade base oils exports of 11,000t in December fell from an already-low 15,090t in November and from typical levels of more than 25,000 t/month, government data showed.

Exports of less than 44,000t in the final three months of 2022 fell from more than 64,500t in the third quarter and by 43pc from year-earlier levels.

Quarterly exports are typically closer to 80,000t.

The country’s base oils exports have previously fallen to lower levels because of factors like plant maintenance work or refinery run-cuts. Such activity typically lasts for less than two months.

The fall in Indonesia’s base oils shipments on those occasions typically lasted for a similar period of time.

The fall in shipments this time lasted for most of the second half of the year.

Weakening lubricating oil consumption in every major market cut base oils demand during the final months of last year.

But demand for Group III base oils remained relatively firm, magnifying the impact of tighter supply.

Demand is likely to get more support over the coming months on the back of a revival in lube consumption in China.

A large cargo from Indonesia moved to China in December. There were signs of another such shipment to China in January.

The steady flows contrasted with a pause in shipments to the Netherlands in December for the first time since March 2022.

The slump in shipments during the second half of the year cut Indonesia’s total premium-grade base oils exports to 258,300t in 2022.

The volume fell by 27pc from almost 355,000t in 2021 to the lowest in more than eight years.