N70 discount to domestic diesel narrows to nineteen-month low, cutting incentive for importsN70 premium to Singapore gasoil rises to two-year high, incentivizing overseas refiners to boost exports to IndiaRising supply and mixed demand signals increase risk of supply-demand mismatch.· India’s imported very-light-grade N70 base oils price discount to domestic diesel narrowed in December, reaching its tightest level in nineteen months, with the trend extending into January..· A narrowing discount to domestic diesel typically reduces the incentive to import additional very light-grade base oils..· The CFR India N70 price premium to Singapore gasoil rebounded in December and January, climbing to its highest level in more than two years.· A wider N70 premium to gasoil typically incentivizes overseas refiners to increase output of very light-grade base oils, supporting higher export flows to India..· Current pricing dynamics simultaneously incentivize higher exports to India while dampening import demand.· The diverging price signals could point to tighter-than-usual overseas supply that is offsetting weaker demand conditions.· India’s imports of very-light grade base oils from Saudi Arabia fell in December, dropping to the lowest level in more than five years, reflecting such a dynamic..Saudi Arabia’s Yanbu/Jeddah Base Oils Exports Slump in December.· India’s total imports of very-light grades still rose to a three-month high in December, supported by higher-than-usual shipments from South Korea..India’s Dec Group II Base Oils Imports Fall to Eighteen-Month Low.· Elevated import volumes and prices that incentivize more such shipments coincide with an expected recovery in flows from Saudi Arabia following the completion of plant maintenance work.· Rising supply, alongside prices that pressure demand, could trigger a growing mismatch between supply-demand fundamentals and subsequent response to correct the imbalance.
