Asia base oils - week of Sep 11: Demand outlook

Asia base oils - week of Sep 11: Demand outlook

·        Asia-Pacific base oils demand likely to get support from expectations of tighter surplus supply and firm-to-higher prices over coming weeks.

·        Prospect of seasonal pick-up in end-user lube demand adds to buyers’ base oils requirements.

·        Strength of seasonal pick-up in lube demand shows signs of being more muted than usual, incentivizing blenders to procure sufficient supplies to cover requirements only.

·        Any such trend would likely limit extent of any rise in prices.

·        China’s demand for regional base oils supplies shows signs of slowing in September after picking up in August.

·        China’s passenger car sales edge up in August year-on-year, lag the ongoing surge in alternative-vehicle sales.  

·        Base oils demand in southeast Asia likely to be more mixed but remain firmer than usual.

·        Singapore’s base oils exports over last four weeks rise close to six-month high on the back of synchronised pick-up in shipments to China, Indonesia and India.

Shipments rise througout region
Shipments rise througout regionEnterprise Singapore

·        Higher-than-usual shipments to India and Indonesia balance out lower-than-usual volumes to China.

·        Extension of that trend would cushion impact of slower demand from China.

·        Southeast Asia’s base oils imports fall in July and in first seven months of the year.

·        Asia refiners’ July base oils exports to southeast Asia follow similar pattern.

Flows slow to SE Asia
Flows slow to SE Asia

·        Trend could curb southeast Asia’s role as counterbalance against weaker Chinese demand.

·        Base oils volumes in southeast Asia in 2023 remain substantially higher than in 2021 – reflecting how refiners have already cut sharply their exposure to China.

·        Still, southeast Asia’s growing market as outlet for regional base oils supplies increases the impact of any slowdown in demand in the region.

·        Thailand’s domestic base oils demand falls in July to lowest in more than a decade.

Domestic demand slumps
Domestic demand slumpsMinistry of Energy

·        Trend reflects combination of rising domestic consumption of premium-grade base oils and falling outright lube demand, especially of industrial oils.

·        Thailand’s July engine oils demand rises for first time in four months, contrasting with ongoing slide in industrial oils consumption.

Engine oils demand revives
Engine oils demand revivesMinistry of Energy

·        Trend increases importance of export markets to maintain Thailand's base oil supply-demand balance.

·        Thailand’s July base oils exports maintain higher-than-usual share of country’s total demand.

Exports share stays high
Exports share stays highMinistry of Energy

·        Extension of trend could help counter likely drop in base oils exports from Japan over coming months.

·        India’s base oils demand likely to hold firm ahead of/during festivals season, boosting need to attract more overseas supplies and to keep arbitrage open.

·        India’s retail diesel price premium to imported prices for very-light grade base oils falls to narrowest in eleven months.

·        Trend likely to limit size of Indian buyers’ requirements for very light grade base oils.

·        India’s base oils imports show signs of falling in August from previous month, partly because of slowing arbitrage shipments from US.

·        Other arbitrage shipments in August include more supplies of bright stock from Thailand and larger-than-usual volumes of light grades from China.

·        India’s August automobile sales rise for seventh time in eight months, with demand for three-wheelers climbing to record-high levels.

·        Prospect of lower-than-usual monsoon rains could impact automobile demand in rural market.

Asia base oils - week of Sep 11: Demand outlook
Global base oils - week of Sep 11: Price outlook - arbitrage

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