· Asia’s base oils demand likely to hold steady ahead of seasonal pick-up in lube demand, and as relatively balanced supply supports prospect of higher prices.· Supply-demand fundamentals contrast with Q3 2022, when oversupply and sliding prices prompted buyers to hold back. · China’s blenders/lube buyers continue to procure on ‘need-to’ basis.· Chinese buyers show little sign of moves to replenish stocks to prepare for seasonal rise in demand from late Q3 2023.· Preference to hold back suggests buyers more willing to face exposure to higher prices than to risk of higher, unsold stocks.· Muted buying raises prospect of stronger pick-up in consumption in shorter time period in coming weeks. .· Asia’s June lube demand rises yoy for second month amid firmer-than-expected consumption in Q2 2023..· Firmer demand contrasts with signs of lower regional supply, raising prospect of smaller surplus in Q3 2023..· South Korea’s July base oil exports to China slump to second-lowest in more than a decade..· Trend partly reflects lower South Korean supplies, partly reflects weaker-than-expected recovery in Chinese demand.· Slowdown coincides with lower domestic base oils output in China, suggests domestic blenders holding off replenishing inventories.· Domestic blenders’ delayed moves to replenish inventories highlights uncertainty about lube demand outlook..· Sustained pause in Thailand/Indonesia’s base oils exports to China in Q2 2023 reflects the country’s unusually muted demand for bright stock..· Trend could leave China’s stocks lower than usual ahead of seasonal pick-up in demand from September, even amid signs of pick-up in flows from Thailand in July..· Philippines’ June base oils/lube imports fall for fourth month, reflecting mixed demand dynamics in southeast Asia..· Indonesia’s Q2 2023 base oils imports fall from Q1 2023, rise from year-earlier levels amid sustained pick-up in requirements..· More diverse demand trends in southeast Asia boost attraction of targeting region with more supplies.· Global economic slowdown impacts southeast Asia's demand, raising importance of managing carefully the volume of supplies to the region..· India’s base oils demand likely to get support from seasonal pick-up in lube consumption from end-Q3 2023, and from concern that prices will rise.· Any pick-up in demand could be more muted after wave of arbitrage shipments boosts country’s imports and blenders’ stocks from start of Q2 2023..· Imports include large shipments from US, Qatar, Thailand, China and Taiwan.· Demand could still hold firm as slowdown in shipments from South Korea to India partially balances out wave of arbitrage cargoes to the country..· India’s July lube consumption edges lower yoy for first time in three months..· Country’s lube demand holds relatively firm even amid seasonal slowdown and more mixed economic growth signals..Global base oils - week of Aug 21: Price outlook - margins
· Asia’s base oils demand likely to hold steady ahead of seasonal pick-up in lube demand, and as relatively balanced supply supports prospect of higher prices.· Supply-demand fundamentals contrast with Q3 2022, when oversupply and sliding prices prompted buyers to hold back. · China’s blenders/lube buyers continue to procure on ‘need-to’ basis.· Chinese buyers show little sign of moves to replenish stocks to prepare for seasonal rise in demand from late Q3 2023.· Preference to hold back suggests buyers more willing to face exposure to higher prices than to risk of higher, unsold stocks.· Muted buying raises prospect of stronger pick-up in consumption in shorter time period in coming weeks. .· Asia’s June lube demand rises yoy for second month amid firmer-than-expected consumption in Q2 2023..· Firmer demand contrasts with signs of lower regional supply, raising prospect of smaller surplus in Q3 2023..· South Korea’s July base oil exports to China slump to second-lowest in more than a decade..· Trend partly reflects lower South Korean supplies, partly reflects weaker-than-expected recovery in Chinese demand.· Slowdown coincides with lower domestic base oils output in China, suggests domestic blenders holding off replenishing inventories.· Domestic blenders’ delayed moves to replenish inventories highlights uncertainty about lube demand outlook..· Sustained pause in Thailand/Indonesia’s base oils exports to China in Q2 2023 reflects the country’s unusually muted demand for bright stock..· Trend could leave China’s stocks lower than usual ahead of seasonal pick-up in demand from September, even amid signs of pick-up in flows from Thailand in July..· Philippines’ June base oils/lube imports fall for fourth month, reflecting mixed demand dynamics in southeast Asia..· Indonesia’s Q2 2023 base oils imports fall from Q1 2023, rise from year-earlier levels amid sustained pick-up in requirements..· More diverse demand trends in southeast Asia boost attraction of targeting region with more supplies.· Global economic slowdown impacts southeast Asia's demand, raising importance of managing carefully the volume of supplies to the region..· India’s base oils demand likely to get support from seasonal pick-up in lube consumption from end-Q3 2023, and from concern that prices will rise.· Any pick-up in demand could be more muted after wave of arbitrage shipments boosts country’s imports and blenders’ stocks from start of Q2 2023..· Imports include large shipments from US, Qatar, Thailand, China and Taiwan.· Demand could still hold firm as slowdown in shipments from South Korea to India partially balances out wave of arbitrage cargoes to the country..· India’s July lube consumption edges lower yoy for first time in three months..· Country’s lube demand holds relatively firm even amid seasonal slowdown and more mixed economic growth signals..Global base oils - week of Aug 21: Price outlook - margins