Spore’s December exports to China rise

Singapore’s base oils exports to China rose to a four-month high in December, while shipments to southeast Asia dipped.

The contrasting trade flows highlighted the repercussions of a revival in Chinese demand and its impact on supplies for other markets.

The trend showed signs of extending into January ahead of a seasonal pick-up in demand in China and southeast Asia over the coming weeks.

Singapore’s base oils exports of 36,620t to China in December rose from 31,740t the previous month to the highest since August, government data showed.

Exports still fell for a ninth month from year-earlier levels, deepening the fall in total shipments to China to 442,810t in 2022.

The volume fell by more than 20pc from 562,380t in 2021 to the lowest in more than six years.

A 16pc rise in shipments to southeast Asia in 2022 helped to balance out the slump in flows to China.

Asia-Pacific base oils prices still fell to unusually weak levels versus diesel and versus prices in other markets to help clear a persistent surplus from the region.

The surge in Singapore’s shipments to southeast Asia last year covered rising lube demand in markets like Indonesia on the back of strong economic growth.

An expected slowdown in economic growth in southeast Asia this year could curb the pace of that trend.

Even so, still-firm growth was likely to sustain the region’s demand for more base oils. China’s economic recovery was likely to provide a further boost to regional growth.

Firm growth in both southeast Asia and China this year would differ from last year and complicate the flow of supplies from key sources like Singapore.

The change in trade flows in December highlighted the new dynamic.

Higher flows to China contrasted with a fall in Singapore's exports to southeast Asia to a seven-month low.

A rise in supply or a drop in demand would help to cover requirements in both markets.

Regional base oils prices are likely to respond accordingly, helping to generate such a change in supply-demand fundamentals over the coming months.