· China’s base oils demand shows ongoing signs of weakness, with closed arbitrage for Asia-Pacific supplies and muted rise in supply.· Trend increasingly repeats similar pattern in 2022, raising prospect of more Asia-Pacific supplies eyeing other outlets instead of China.· Most of the rise in China’s supply in May reflected higher output following the completion of plant maintenance work rather than a response to a change in demand.· China’s weak demand leaves more supplies from Thailand staying in southeast Asia or targeting other outlets like India and Mideast Gulf during Q2 2023.· Slump in Indonesia’s base oils exports to China in first four months of 2023 highlights extend of its demand weakness..· China’s demand weakness removes key support for regional bright stock prices – which typically peak each year at end Q1/early Q2.· Regional base oils demand weakness extends to southeast Asia.· Indonesia’s lower April base oils imports add to region-wide slowdown in demand, curbing impact of plant maintenance in Q2 2023.· Any extension of slowdown in demand from year-earlier levels into Q3 2023 would compound impact of seasonal slowdown during that period.· Lower demand in southeast Asia compounds impact of slowdown in Chinese demand, could push regional refiners to target more distant markets with surplus supplies.· Any such moves may be more challenging this year than last year. · Japan’s April base oils supply falls less than demand, triggering rise in surplus volumes..· Asia-Pacific region sees more widespread repeat of that trend, countering impact of plant maintenance work.· Japan’s base oils exports could hold steadier than expected if domestic demand falls, freeing up more surplus supplies to clear in overseas markets.· Sustained fall in Japan’s lube consumption in recent months raises prospect of drop in domestic base oils requirements.· Japan’s lower base oils imports so far this year tally with signs of lower domestic lube consumption.· Asia’s April base oils exports fall to lowest this year on drop in supply and lower demand..· Trend shows signs of continuing through Q2 2023.· Singapore’s four-week base oils exports stay range-bound so far this year, even with plant maintenance in Q2 2023 – adding to signs of steady supply.· Slowdown in Pakistan’s lube demand shows signs of gathering pace in Q2 2023.· Any sustained slowdown would have a disproportionate impact on demand for overseas supplies of Group II heavy grades, which typically account for large share of country’s base oils imports.· India’s May automobile sales rise for fourth time in five months, with demand expected to hold firm over coming months.· India’s May auto sales include 78pc rise in sales of three-wheelers on back of surging demand for electric-powered rickshaws.· India’s May lube demand extends protracted slowdown, contrasts with rising domestic base oils output..· Trend incentivizes blenders to hold lower stocks, gives them flexibility to replenish inventories with smaller volumes more frequently.· Lower demand, rising domestic supply and wave of arbitrage shipments from US leave blenders with leverage to turn down prices they deem to be too high..Global base oils – week of June 12: Price outlook - margins.Contact us for more information about the data for these stories
· China’s base oils demand shows ongoing signs of weakness, with closed arbitrage for Asia-Pacific supplies and muted rise in supply.· Trend increasingly repeats similar pattern in 2022, raising prospect of more Asia-Pacific supplies eyeing other outlets instead of China.· Most of the rise in China’s supply in May reflected higher output following the completion of plant maintenance work rather than a response to a change in demand.· China’s weak demand leaves more supplies from Thailand staying in southeast Asia or targeting other outlets like India and Mideast Gulf during Q2 2023.· Slump in Indonesia’s base oils exports to China in first four months of 2023 highlights extend of its demand weakness..· China’s demand weakness removes key support for regional bright stock prices – which typically peak each year at end Q1/early Q2.· Regional base oils demand weakness extends to southeast Asia.· Indonesia’s lower April base oils imports add to region-wide slowdown in demand, curbing impact of plant maintenance in Q2 2023.· Any extension of slowdown in demand from year-earlier levels into Q3 2023 would compound impact of seasonal slowdown during that period.· Lower demand in southeast Asia compounds impact of slowdown in Chinese demand, could push regional refiners to target more distant markets with surplus supplies.· Any such moves may be more challenging this year than last year. · Japan’s April base oils supply falls less than demand, triggering rise in surplus volumes..· Asia-Pacific region sees more widespread repeat of that trend, countering impact of plant maintenance work.· Japan’s base oils exports could hold steadier than expected if domestic demand falls, freeing up more surplus supplies to clear in overseas markets.· Sustained fall in Japan’s lube consumption in recent months raises prospect of drop in domestic base oils requirements.· Japan’s lower base oils imports so far this year tally with signs of lower domestic lube consumption.· Asia’s April base oils exports fall to lowest this year on drop in supply and lower demand..· Trend shows signs of continuing through Q2 2023.· Singapore’s four-week base oils exports stay range-bound so far this year, even with plant maintenance in Q2 2023 – adding to signs of steady supply.· Slowdown in Pakistan’s lube demand shows signs of gathering pace in Q2 2023.· Any sustained slowdown would have a disproportionate impact on demand for overseas supplies of Group II heavy grades, which typically account for large share of country’s base oils imports.· India’s May automobile sales rise for fourth time in five months, with demand expected to hold firm over coming months.· India’s May auto sales include 78pc rise in sales of three-wheelers on back of surging demand for electric-powered rickshaws.· India’s May lube demand extends protracted slowdown, contrasts with rising domestic base oils output..· Trend incentivizes blenders to hold lower stocks, gives them flexibility to replenish inventories with smaller volumes more frequently.· Lower demand, rising domestic supply and wave of arbitrage shipments from US leave blenders with leverage to turn down prices they deem to be too high..Global base oils – week of June 12: Price outlook - margins.Contact us for more information about the data for these stories
