· Asia’s base oils demand likely to be mixed, with muted Chinese demand, steady buying interest in southeast Asia and firmer demand in India.· Signs of balanced-to-tight regional supply and refiners’ squeezed margins likely to support demand as buyers face risk of even higher prices if they hold back..· Asia’s lube demand likely to get seasonal boost this and next month even as it lags year-earlier levels..· Seasonal pick-up in consumption likely to sustain steady base oils demand from regional blenders.· Steady demand would coincide with regional plant maintenance work and plant closure over coming months.· Regional blenders likely already began replenishing stocks earlier in Q3 2023, curbing need to procure large volumes in coming months..· More major lubricants blenders in China announce moves to raise finished product prices from beginning or middle of October in response to rising costs.· Move could trigger temporary pick-up in demand as end-users lock in supplies before new prices take effect.· Rise in lube prices may face push-back, with China’s lube demand staying more muted than usual at a time of year when consumption typically gets a seasonal boost.· Weaker-than-usual lube demand and expectations of sufficient base oils supply add to domestic blenders’ preference to maintain low stocks and to replenish inventories with smaller volumes.· Trend keeps pressure on China’s base oils demand.· Trend curbs domestic refiners’ leverage to raise prices in response to weak margins and triggers additional or extended plant maintenance work.· China’s base oils imports fall to one-year low in August, despite low domestic base oils output..· Trend suggests domestic blenders were more comfortable with the risk of holding lower stocks ahead of seasonal pick-up in demand at end Q3 2023.· That preference suggests blenders were concerned that seasonal pick-up in demand would lag expectations, and that supply would remain sufficient.· Any seasonal pick-up in demand remains muted so far, reflecting those concerns..· China’s importers show little sign of lining up alternative supplies to cover for slowdown in imports from Taiwan ahead of and during plant maintenance work in October.· Singapore’s August base oils exports to China rise from trough in July, show little sign of rising any higher in September..· Muted moves to line up additional shipments to China add to signs of weak demand in the country extending through Q4 2023..· China’s weak demand contrasts with sustained strength in Australia, whose July lube demand rises for twelfth month on sustained strength of industrial oils consumption..· Trend contrasts with many other markets in Asia, where PCMO demand remains firmer than industrial oils.· Trend boosts attraction of boosting share of Australia’s base oils market in view of different feedstock requirements for industrial oils vs engine oils..· India’s base oils demand likely to get boost from seasonal pick-up in consumption and drop in supply.· India’s August base oils supply falls to eight-month low as lower output coincides with drop in imports..· Plant maintenance work likely to keep domestic output lower than usual in September.· Lower output boosts blenders’ need to lock in more supplies from overseas sources..· India’s August very-light grade base oils imports fall to lowest in more than two years, even with wider-than-usual retail diesel premium to base oil prices in July and August..· Wide diesel premium to base oil prices previously often spurred stronger demand.· Lower imports instead reflected tighter supply from Qatar and South Korea, where plant-maintenance work impacted July-loading shipments.· Lower imports curbed Indian buyers’ opportunity to boost stocks ahead of an expected rise in base oil prices, which subsequently materialized.· Narrower diesel premium to base oils prices in September could curb buyers’ interest in additional supplies of very-light grade base oils.· Narrow gap between diesel and very-light grade base oils prices could also extend drop in overseas shipments of very-light grade base oils to India..· India’s demand for Group III 4cst base oils shows signs of holding firm, with imports in August edging down because of plant maintenance work in South Korea in July..· India’s demand for Group III 8cst base oils likely to stay weak unless prices get more competitive vs Group II heavy grades.· Slump in India’s Group III 8cst imports coincides with 8cst prices holding at premium to imported Group II N500 cargo prices, ICIS data shows..· India’s base oils imports likely to get boost in September from pick-up in South Korea’s base oils exports to the country in August..· Rise in flows from South Korea to India likely to continue amid rising supply and waning competition from arbitrage shipments from other sources..· Pakistan’s steadier base oils imports in three months to July coincide with improving domestic lube demand..· Firmer demand likely to benefit South Korean base oils suppliers especially as their share of Pakistan’s base oils imports continues to rise..· Pakistan’s July base oils supply, or domestic output and imports combined, rises for second time in three months, adding to signs of steadier demand..Global base oils - week of Sep 25: Price outlook - arbitrage
· Asia’s base oils demand likely to be mixed, with muted Chinese demand, steady buying interest in southeast Asia and firmer demand in India.· Signs of balanced-to-tight regional supply and refiners’ squeezed margins likely to support demand as buyers face risk of even higher prices if they hold back..· Asia’s lube demand likely to get seasonal boost this and next month even as it lags year-earlier levels..· Seasonal pick-up in consumption likely to sustain steady base oils demand from regional blenders.· Steady demand would coincide with regional plant maintenance work and plant closure over coming months.· Regional blenders likely already began replenishing stocks earlier in Q3 2023, curbing need to procure large volumes in coming months..· More major lubricants blenders in China announce moves to raise finished product prices from beginning or middle of October in response to rising costs.· Move could trigger temporary pick-up in demand as end-users lock in supplies before new prices take effect.· Rise in lube prices may face push-back, with China’s lube demand staying more muted than usual at a time of year when consumption typically gets a seasonal boost.· Weaker-than-usual lube demand and expectations of sufficient base oils supply add to domestic blenders’ preference to maintain low stocks and to replenish inventories with smaller volumes.· Trend keeps pressure on China’s base oils demand.· Trend curbs domestic refiners’ leverage to raise prices in response to weak margins and triggers additional or extended plant maintenance work.· China’s base oils imports fall to one-year low in August, despite low domestic base oils output..· Trend suggests domestic blenders were more comfortable with the risk of holding lower stocks ahead of seasonal pick-up in demand at end Q3 2023.· That preference suggests blenders were concerned that seasonal pick-up in demand would lag expectations, and that supply would remain sufficient.· Any seasonal pick-up in demand remains muted so far, reflecting those concerns..· China’s importers show little sign of lining up alternative supplies to cover for slowdown in imports from Taiwan ahead of and during plant maintenance work in October.· Singapore’s August base oils exports to China rise from trough in July, show little sign of rising any higher in September..· Muted moves to line up additional shipments to China add to signs of weak demand in the country extending through Q4 2023..· China’s weak demand contrasts with sustained strength in Australia, whose July lube demand rises for twelfth month on sustained strength of industrial oils consumption..· Trend contrasts with many other markets in Asia, where PCMO demand remains firmer than industrial oils.· Trend boosts attraction of boosting share of Australia’s base oils market in view of different feedstock requirements for industrial oils vs engine oils..· India’s base oils demand likely to get boost from seasonal pick-up in consumption and drop in supply.· India’s August base oils supply falls to eight-month low as lower output coincides with drop in imports..· Plant maintenance work likely to keep domestic output lower than usual in September.· Lower output boosts blenders’ need to lock in more supplies from overseas sources..· India’s August very-light grade base oils imports fall to lowest in more than two years, even with wider-than-usual retail diesel premium to base oil prices in July and August..· Wide diesel premium to base oil prices previously often spurred stronger demand.· Lower imports instead reflected tighter supply from Qatar and South Korea, where plant-maintenance work impacted July-loading shipments.· Lower imports curbed Indian buyers’ opportunity to boost stocks ahead of an expected rise in base oil prices, which subsequently materialized.· Narrower diesel premium to base oils prices in September could curb buyers’ interest in additional supplies of very-light grade base oils.· Narrow gap between diesel and very-light grade base oils prices could also extend drop in overseas shipments of very-light grade base oils to India..· India’s demand for Group III 4cst base oils shows signs of holding firm, with imports in August edging down because of plant maintenance work in South Korea in July..· India’s demand for Group III 8cst base oils likely to stay weak unless prices get more competitive vs Group II heavy grades.· Slump in India’s Group III 8cst imports coincides with 8cst prices holding at premium to imported Group II N500 cargo prices, ICIS data shows..· India’s base oils imports likely to get boost in September from pick-up in South Korea’s base oils exports to the country in August..· Rise in flows from South Korea to India likely to continue amid rising supply and waning competition from arbitrage shipments from other sources..· Pakistan’s steadier base oils imports in three months to July coincide with improving domestic lube demand..· Firmer demand likely to benefit South Korean base oils suppliers especially as their share of Pakistan’s base oils imports continues to rise..· Pakistan’s July base oils supply, or domestic output and imports combined, rises for second time in three months, adding to signs of steadier demand..Global base oils - week of Sep 25: Price outlook - arbitrage