Japan's base oil imports slowed on the month in January, but was slightly above year-earlier levels from a low base resulting from Covid-19, according to data from Global Trade Tracker.
Lubricant imports fell by 9pc from a month earlier to 33,400t in January, with South Korean shipments accounting for most of the decline. But Japan's imports were 2pc higher compared with a year earlier.
Imports from South Korea fell by 14pc from a year earlier and by 27pc from a month earlier to 16,100t in January, the largest month-on-month drop in three months. South Korea is a key producer of premium-grade base oils, while Japan produces mainly Group I base oils. Japanese base oil and lubricant imports from South Korea averaged 20,000 t/month over the last five years.
Imports from Qatar also declined. Imports fell by 64pc, or 7,500t from a month earlier to 4,200t in January, and was also down by 57pc from a year earlier. The volume is significantly lower than the five-year average of 7,700 t/month. Qatar houses a key premium-grade base oil producer in the Mideast Gulf. The drop in exports to Japan in January coincides with higher premium-grade base oil prices in other regions during the month.
But imports rose from Singapore, a key producer of Group II base oils in the Asian region. Imports from the city-state surged by around tenfold from a month earlier and by over fivefold from a year earlier to 11,900t in January, which was atypical. Imports from Singapore had averaged less than 1,500 t/month over the last five years.
The drop in imports from South Korea and Qatar also reflect ebbing base oil and lubricant demand in Japan. Base oil and lubricant consumption fell by more than 7pc from a month earlier to 117,800t in January, although this was up by 28pc from a year earlier. Consumption levels were close to their five-year average of 114,100 t/month. But they were lower than average consumption of 135,900 t/month from April-December 2022, the first nine months of Japan's 2022-23 fiscal year.
Domestic base oil production dropped on the month, providing some support to the demand-supply balance in the country. Base oil and lubricant production fell by 12pc from a month earlier to 168,200t in January, but was higher by 17pc from a year earlier. The volume was largely in line with its five-year average of 165,800 t/month. But production is set to fall further in the second half of 2023 as a refinery in the country is scheduled to shut permanently by October. Another refinery is set to undergo maintenance in the third quarter of the year. The producer is expected to build inventories ahead of the maintenance.
