· Asia’s lube demand shows signs of shallower-than-expected seasonal slowdown in Q3 2023, and firm revival in demand from end-Q3 2023..· Base oils demand anticipates, so precedes state of lube demand.· Trend would support firmer base oils demand in coming weeks to meet demand at end-Q3 2023/early Q4 2023.· Trend likely to get further support if buyers deem regional supply to be balanced and expect prices to avoid the kind of sharp correction they faced in Q3 2022.· Such a scenario partly depends on regional refiners’ ability to avoid supply-build over coming weeks.· China’s June base oils imports stay lower than usual as post-lockdown economic recovery lags expectations..· China’s lube demand likely to remain muted over coming weeks during seasonal slowdown.· Domestic blenders likely to eye replenishment of feedstock supplies to meet expected seasonal rise in demand from September.· China’s auto sales flatline in 1H July year on year, likely to get boost from stimulus measures.· South Korea’s June base oils exports fall to China, rise to Japan..· Trend reflects contrasting demand dynamics in both countries, highlighting need for regional refiners to continue to diversify away from China.· Trend suggests slower-than-expected Chinese demand may have smaller-than-expected impact on regional refiners.· South Korea’s June base oils exports to southeast Asia hold steady, adding to signs of such a dynamic..· Trend highlights importance of, ongoing growth and signs of improving demand in southeast Asia market.· Key role of southeast Asia as growth market leaves refiners situated in the region better placed to tap that growth. · India’s imports of wave of US Group II base oils in June coincides with/balances out impact of plant maintenance work in Singapore and South Korea..· India takes delivery of several more shipments from US in July, when plant maintenance in Singapore already ended and plant maintenance in South Korea was set to end.· Any further extension of US shipments to India during Q3 2023 could complicate flows from Asia to India.· Refiners would then have choice of redirecting supplies to other markets, or cutting production, or cutting prices.· Very-light grade base oils account for small share of recent US shipments to India.· Trend suggests US refiners are clearing very-light grade supplies through other markets.· Trend suggests US shipments have little impact on main sources for India’s very-light grade base oils market - South Korea, Mideast Gulf and Spain.· Rising feedstock costs could incentivize those suppliers to redirect very-light grade supplies back into their diesel pool instead.· Singapore’s rising base oils exports to southeast Asia in four weeks to July 19 contrast with sliding shipments to China..· Trend reflects ongoing structural shift in Asia-Pacific supplies to southeast Asia and away from China. .Global base oils - week of July 24: Price outlook - margins
