Asia base oils - week of April 24: Demand outlook

·        China’s first-quarter headline economic growth rises strongly.

·        China’s more mixed lubricants demand in Q1 more reflective of details behind the growth - strong retail sales and weak industrial production.

·        China’s base oils imports show signs of rising strongly in March, pointing to rising domestic demand.

·        Signs of slowdown in overseas shipments to China in more recent weeks suggest relatively slow consumption of the supplies.

·        South Korea’s exports to China slow down in March, from two-year high in February.

·        Surge in Singapore’s exports to China in March implies pick-up in demand northeast Asian country.

·        Subsequent slowdown in Singapore’s exports to China from second-half March suggest strength of demand remains variable.

·        Signs of firmer Chinese demand in March, slowdown in Chinese demand in April extend pattern of mixed signals.

·        Uncertainty about strength/sustainability of Chinese demand adds to incentive for regional refiners to limit reliance on China, boost sales in other markets.

·        Asia’s February lube demand rises to four-month high.

·        Asia’s lube demand in March typically rises from February to one of the highest monthly levels in the year.

·        Asia’s lube demand in April typically falls sharply from March.

·        Asia’s lube demand in May fell from April in 2021 and 2022.

·        India’s very-light-grade base oils imports stay unusually low in Q1 2023, despite low prices.

·        Demand likely to get support from blenders to meet lube production requirements.

·        Recent, latest drop in crude prices and signs of pick-up in US arbitrage shipments to India could curb buyers' urgency to lock in more supplies.

·        Prospect of steady light-grade prices would maintain their wide discount to India's retail diesel prices.

·        Very-light grade base oils imports faced sustained fall since 2H 2022 even with wide discount to retail diesel prices.

·        Trend suggests demand likely to remain relatively muted compared with pre-2022 levels.

·        India’s demand for Group III 4cst base oils holds firm even amid high prices, reflecting structural rise in requirements amid more stringent engine oil specifications.

·        India’s demand for Group III 8cst base oils could improve if Group II heavy-grade prices rise.

·        Recent demand weakness for Group III 8cst coincided with widening premium to Group II heavy grades.