Pakistan’s Dec base oils imports fall

Pakistan’s base oils imports fell to a three-month low in December in the face of weak domestic lube demand.

Imports still rebounded strongly in the final months of the year compared with the third quarter, and especially compared with the country’s domestic base oils production.

Higher base oils imports in 2022 also contrasted with lower domestic base oils production last year.

The dynamic reflected Pakistan’s growing demand for premium-grade base oils and its need to tap overseas markets to cover those requirements.

The country’s domestic production consists solely of Group I base oils.

The pattern was similar to other markets like Turkey.

That country’s domestic Group I base oils production also fell last year as buyers consumed more premium-grade supplies instead.

Pakistan’s economic challenges could complicate the steady flow of base oils shipments to the country.

Any such slowdown would have a larger impact in view of Pakistan’s imports accounting for a growing share of the country’s total base oils supply.

Imports of less than 21,000t in December fell from more than 27,500t in November and by 18pc from year-earlier levels, provisional customs data showed.

Even with the slowdown, fourth-quarter imports of more than 71,000t rebounded by almost half from less than 48,000t during the previous three months.

Pakistan’s domestic base oils production of close to 43,000t in the fourth quarter also rose, but by a smaller 17pc from around 37,000t during the previous three months.

The increase in imports and production far outpaced the 3pc rise in domestic demand during the same period.

Weak total demand and rising consumption of premium-grade base oils to meet that demand was likely to put growing pressure on domestic base oils refiners to cut output or boost exports.

Total base oils imports of around 287,000t in 2022 rose by more than 20pc from 235,000t the previous year.

Their share of Pakistan’s base oils supply rose to around 64pc of the total, up from 59pc the previous year.