Vietnam’s August base oils imports fall

Vietnam’s base oils imports slipped in August to their second-lowest level this year even as the country’s economy continued to grow strongly.

A sharp fall in regional base oils prices began at the start of the third quarter and continued through August.

The trend incentivized buyers to delay or trim their requirements until they were comfortable that prices had bottomed out.

Buyers used a similar strategy in other markets in the region to limit their exposure to lower prices.

The trend highlighted the larger-than-usual distorting impact of sharp price moves on demand in the base oils market because of a lack of hedging tools.

Vietnam’s base oils imports of 15,260t in August fell from 19,080t in July to a three-month low, provisional customs data showed.

Even with the slowdown, the country’s base oils imports of 154,310t in the first eight months of the year remained up 8pc from 142,920t during the same period last year.

The rise in imports mirrored a trend throughout the southeast Asia market as the withdrawal of pandemic-related restrictions triggered a strong rebound in economic growth.

The trend prompted refiners in Asia-Pacific to move more base oils shipments to the region. Weak Chinese demand and firmer prices in southeast Asia added to the attraction of such moves.

Vietnam’s economy grew by more than 13pc in the third quarter of the year, with firm growth in every sector from industry to services.

The country’s automobile sales rose in September for a ninth straight month, with demand well above September 2019 levels.

The pace of Vietnam’s economic growth is likely to slow over the coming months.

The low base effect from last year will drop out. Rising interest rates and slower growth in key overseas markets are also likely to dampen growth.

Base oils demand could still get a boost after buyers held back in the third quarter because of falling prices. Steadier prices and lower inventories would incentivize them to replenish their stocks.

The fall in Vietnam’s base oils imports in August mostly reflected a dip in supplies from South Korea to a three-month low of less than 6,000t.

The slowdown contrasted with a rise in shipments from Singapore from July levels.

Falling prices and high freight rates boosted the attraction of procuring supplies from nearby markets for more prompt delivery to limit exposure to price volatility before the shipments arrived.