FocusIndian buyers shun spot base oils imports amid weak rupee

05 September 2013 03:24  [Source: ICIS news]

By Junie Lin

Lubricants are the major downstream application of base oilsBRISBANE (ICIS)--India buyers are shunning spot base oils imports for September to mitigate the impact of the sliding Indian currency, market sources said on Thursday.

The sharp depreciation in the Indian rupee against the US dollar has dampened base oils demand, as buyers opted to take a wait-and-see stance towards the near-term trend of the Indian currency before booking their shipments.

The Indian rupee has depreciated by over 25% against the dollar since 1 April 2013. A weaker currency makes imports more expensive.

Indian end-users, mostly white oil and transformer oil makers, said they are sourcing their base oils from local suppliers and are only keeping to term requirements from regional suppliers for September as domestic cargoes are less exposed to the volatile rupee.

The impact of skipping spot volumes might be cushioned by the low downstream demand of lubricants in view of the monsoon season and earlier bulk purchases of 15,000-16,000 tonnes of spot Group II 100N cargoes in August, said buyers. 

Demand, especially from the downstream lubricant segment, is showing some signs of picking up with the end of the monsoon season in late August, they added.

“The rainy season, which lasts from late June to late August, is typically a period of low demand for lubricant oils,” said a trader.

Spot Group I base oil prices in India were assessed at $920-950/tonne (€699-722/tonne) CFR (cost & freight) India for SN150, $1,000-1,020/tonne CFR India for SN500 and $1,140-1,200/tonne CFR India for brightstock in the week ended 30 August, unchanged from the previous week, according to ICIS data.

Spot Group II base oil prices in India were similarly unchanged at $1,000-1,080/tonne CFR India and for 150N and at $1,100-1,200/tonne CFR India for 500N during the same period, according to ICIS data.

In tandem with the massive surge in international crude in recent weeks, domestic prices had also been under upward pressure.

In the domestic market, India’s Hindustan Petroleum Corp Ltd (HPCL) has raised its domestic prices for some grades of Group I base oils effective 1 September.

The company’s prices for SN150 increased by Indian rupees (Rs) 8.00/litre ($0.13/litre). Its SN500 prices rose by Rs9.10/litre, while its brightstock prices were raised by Rs10.40/litre, the traders said.

Similar increases were also implemented by other local refineries such as Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL), they said.

However, some market players said that India can only reduce imports for the time being and purchase cautiously as the total amount of local domestic supply and term cargoes is unable to meet India’s monthly requirements.

($1 = €0.76, $1 = Rs67.93)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Junie Lin



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