· Asia’s base oils demand could be more muted than usual even with market fundamentals likely to tighten over coming weeks.· Less feasible arbitrage to markets like China and India coincides with time of year when demand typically gets seasonal boost.· Less feasible arbitrage could suggest buyers are comfortable with existing stocks.· Less feasible arbitrage could reflect fall in feedstock prices in recent weeks, raising buyers’ concern about adjustment in base oils prices to reflect those lower costs.· Less feasible arbitrage could leave buyers with tight supplies if demand exceeds expectations at a time when surplus supply is set to tighten..· China’s demand shows signs of staying more muted than usual at a time of year when spring oil-change season usually triggers stronger buying interest.· China’s Group II light and especially heavy-neutrals base oils prices extend fall versus FOB Asia cargo prices..· Narrower premium to FOB Asia prices points to more muted domestic demand, cuts incentive for regional refiners to boost shipment volumes to China.· Shipments from Taiwan to China in Feb 2025 show little signs of major increase, reflecting less attractive arbitrage.· Narrower premium to FOB Asia prices includes products for which China remains structurally shorter such as Group II heavy grades.· Less feasible arbitrage points to sufficient domestic supply even ahead of major plant maintenance in China in coming weeks.· Less feasible arbitrage could reflect domestic buyers’ preference to maintain lower stocks than usual for time of year amid uncertainty about economic outlook..· Singapore’s base oils exports to southeast Asia over last four weeks extend rebound to highest level since mid-2024..· Surge in shipments enables buyers to replenish stocks ahead of seasonal rise in demand later in Q1 2025.· Tighter availability of spot supplies likely boosts buyers’ demand for maximum volume of term supplies from sources like Singapore..· Ongoing slide in Japan’s base oils exports to southeast Asia in Jan 2025 sustains stronger demand from Asia’s remaining sources of Group I base oils, like Singapore..· Singapore’s exports to China stay higher over last four weeks and at similar level to same time a year earlier.· Exports hold steady at higher levels even amid signs of more muted demand in China.· Singapore’s base oils exports to India stay much higher over last four weeks than in Feb 2024..· India’s base oils demand could get support from blenders’ lower inventories after supply lags demand in Jan 2025 for second month..· Buyers face additional challenge of likely drop in surplus supply from overseas sources because of plant maintenance work and rising domestic demand in those overseas markets.· India’s imported cargo price for Group II base oils maintains relatively low premium to FOB Asia cargo prices..· Low premium and marginal arbitrage suggest that buyers have sufficient supplies to meet demand.· India’s imports from Taiwan show signs of staying at elevated levels in Feb 2025 even with low CFR India price premium to FOB Asia prices.· India's imports from UAE show signs of climbing to higher-than-usual levels in Feb 2025.· Low premium to FOB Asia prices could reflect recent fall in feedstock prices, curbing expectations of upward pressure on base oils prices.· Low premium could reflect concern that any additional arbitrage shipments would only reach India in Q2 2025.· Domestic demand typically falls at start of second quarter of the year, after surge in consumption in month of March.· Buyers would still face pressure to procure supplies to replenish depleted stocks.· Low premium could reflect buyers’ preference to maintain leaner stocks for now amid expectations that there will be sufficient supply to replenish depleted stocks..· India’s discount of CFR N70 cargo price to domestic diesel price falls in Feb 2025 to lowest since Aug 2024..· Wider N70 discount to diesel often coincides with firmer demand for very-light grade base oils.· Any further narrowing of N70 discount could trigger slowdown in demand for very-light grade base oils..India's Jan base oils supply lags demand.Asia base oils supply outlook: Week of 24 Feb
