Indonesia's Nov Group III exports fall

Indonesia’s Group III base oils exports stayed lower than usual in November for a fourth month, curbing availability for markets like China and the US.

The drop in exports since August had coincided with Group III plant maintenance work in Europe and Mideast Gulf.

A slowdown in lube demand in a growing number of markets focused more on industrial oils. Firmer consumption of passenger car engine oils continued to support demand for Group III base oils.

The strong supply-demand fundamentals supported firm global prices for the premium-grade product.

The premium of Group III prices over Group I and Group II base oils widened further during the second half of the year.

Availability of supply improved in Europe and Mideast Gulf at the end of last year following the completion of plant maintenance work.

The recovery failed to extend to Indonesia, whose base oils exports remained low.

Shipments of 15,090t in November fell from less than 18,000t the previous month and from typical levels of closer to 27,000 t/month in the year to June, government data showed.

Exports fell for a fifth month from year-earlier levels, cutting total supply to 247,290t in the first eleven months of the year.

The volume was down 26pc from 335,790t during the same period last year.

The drop in exports coincided with a surge in Indonesia’s base oils imports in 2022 as strong economic growth boosted lubricants consumption.

The rise in domestic demand could have absorbed some of the premium-grade supplies that were previously lined up for export markets.

The drop in exports had the largest impact on shipments to South Korea. A large portion of shipments to that market then move on to the US.

US demand for Group III base oils remained strong throughout last year, with prices at a steep premium to prices in other markets.

But one producer cut its Group III posted prices in the US from the start of this year. The price cut was the first in several years.

South Korea’s base oils exports also fell to China, where demand was unexpectedly weak last year.

Shipments of less than 23,500t to the country in the first eleven months of the year fell from almost 31,500t during the same period in 2021.

Demand in China is likely to rebound this year following the end of the country’s zero-Covid policy and its move to living with the virus.

Base oils exports to the Netherlands were the outlier, with steady flows to the country throughout the year.

Shipments of almost 102,000t to the Netherlands in the first eleven months of the year rose from less than 88,200t during the same period last year.