· Asia-Pacific base oils demand could get support from any unexpected pick-up in requirements from China.· Persistent signs of weaker-than-expected Chinese demand prompt regional refiners to redirect supplies to other markets.· Any reversal of that trend would cut supply availability for other markets. · China’s June base oils demand extends gradual recovery, remains far below 2021 levels..· Domestic demand could get temporary support from signs of upward price-pressure amid rising feedstock costs.· Domestic Chinese prices already outperform regional prices in recent weeks.· Trend could trigger unexpected pick-up in demand for regional supplies even if China's outright demand stays muted.· Prospect of open arbitrage could limit room for Chinese refiners to raise prices, adding to the attraction of cutting plant run-rates or prolonging shutdowns.· China’s Q2 2023 base oils exports stay high, pointing to sufficient domestic supply in face of weaker-than-expected demand recovery.· China’s June exports include shipments to twenty-eight countries. The average number of destinations in 2022 was less than thirteen..· Trend reflects both structural rise in China’s outright base oils exports, and rise in flexibag shipments to markets like Europe and Latin America.· Flows to Latin America could increase competition for US naphthenic base oils producers especially.· China’s July automobile sales show signs of rising slightly from year-earlier levels, with alternative-vehicle sales rising much more sharply.· Singapore’s June base oils exports to southeast Asia extend strong rise, mostly because of sustained rise in shipments to Indonesia..· Singapore’s rising share of shipments to Indonesia leaves island-state more exposed to any slowdown in the country’s demand, provides opportunities for other regional refiners to tap demand in other markets.· Vietnam’s Q2 base oils imports rise from Q1 2023 and from year-earlier levels..· Widespread pockets of firmer demand in southeast Asia add to attraction of targeting the region with more supplies.· Vietnam’s lack of domestic base oils production capacity adds to attraction of boosting supplies to the country.· Fall in automobile sales in southeast Asia’s largest markets show signs of slowing in June..· India’s blenders face little urgency to line up more supplies amid signs of healthy stocks and additional arbitrage shipments moving to country.· Prospect of higher base oils prices could prompt buyers to lock in additional supplies at current prices, for shipments that would likely arrive at end-Q3/early Q4 2023..Global base oils - week of July 31: Price outlook - margins
