· Asia’s base oils demand faces slowdown at year-end followed by rise in requirements from early 2024.· Base oils prices fall more steeply for cfr India/domestic China Group II prices than for fob Asia prices.· Trend points weaker Group II supply-demand fundamentals in key outlets, puts pressure on fob Asia prices to respond in kind.· Signs of downward price-pressure could add to blenders’ preference to hold off for now.· China/India Group I bright stock premium to fob Asia prices holds firmer, pointing to steadier demand for that product..· Asia’s lube demand faces strong seasonal rise in Q1 2024, when quarterly consumption typically peaks each year..· Seasonal rise in demand would absorb more of Asia’s base oils supplies, which are likely to rise at end-2023 and early next year.· Firmer demand in Q1 2024 would leave supply-demand fundamentals more balanced, limit the need to move large volumes to other more distant markets..· China’s demand continues to show mixed signals, mirroring country’s economic indicators.· China’s domestic Group II light-grade price premium to diesel prices extends fall following strong surge to mid-Nov 2023.· Lower price-premium points to supply-demand fundamentals that are too weak to avoid pressure from lower feedstock costs.· More mixed demand signals follows fall in October base oils demand to ten-month low..· Lower demand points to priority of consuming existing supplies first to maintain low stocks.· Strategy points to concern about demand outlook and expectations of easy access to supply as and when required.· Strategy leaves domestic buyers exposed to any stronger-than-expected pick-up in demand over the coming months.· Buyers remain more comfortable with that risk.· China’s demand likely to increase more sharply from 2H Feb 2024, following Chinese new year holidays..· Singapore’s base oils exports to China extend rise last week and over month of Nov 2023..· Sustained rise in shipments follows Singapore’s higher exports to China in Oct 2023.· Rise in shipments to China, and fall in Singapore’s base oils imports from China over month of Nov 2023, point to pick-up in demand following October slowdown..· Any pick-up in Chinese demand would coincide with signs of steady base oils/lube consumption in Japan, which rises in Oct 2023 for third time in four months..· Firmer demand in northeast Asia would consume more of the region’s base oils supplies, cut volumes available for export..· Vietnam’s October base oils imports rise to thirteen-month high..· Vietnam’s base oils imports lag year-earlier levels in 1H 2023, exceed year-earlier levels so far in 2H 2023.· Trend adds to signs of recovery in demand throughout southeast Asia and increases importance of the region as outlet for Asia’s refiners..· Sharp slowdown in Singapore’s base oils exports to India continues throughout month of Nov 2023.· Slowdown in shipments coincides with signs of sustained pick-up in flows from South Korea to India, rise in arbitrage shipments from US to India, and pick-up in flows from Mideast Gulf to India.· Falling prices, signs of more plentiful supply and more plentiful supply options give Indian buyers more leverage to hold back even amid steady domestic demand..Global base oils - week of Dec 4: Demand outlook.Global base oils - week of Dec 4: Price outlook - margins.Global base oils - week of Dec 4: Price outlook - arbitrage
· Asia’s base oils demand faces slowdown at year-end followed by rise in requirements from early 2024.· Base oils prices fall more steeply for cfr India/domestic China Group II prices than for fob Asia prices.· Trend points weaker Group II supply-demand fundamentals in key outlets, puts pressure on fob Asia prices to respond in kind.· Signs of downward price-pressure could add to blenders’ preference to hold off for now.· China/India Group I bright stock premium to fob Asia prices holds firmer, pointing to steadier demand for that product..· Asia’s lube demand faces strong seasonal rise in Q1 2024, when quarterly consumption typically peaks each year..· Seasonal rise in demand would absorb more of Asia’s base oils supplies, which are likely to rise at end-2023 and early next year.· Firmer demand in Q1 2024 would leave supply-demand fundamentals more balanced, limit the need to move large volumes to other more distant markets..· China’s demand continues to show mixed signals, mirroring country’s economic indicators.· China’s domestic Group II light-grade price premium to diesel prices extends fall following strong surge to mid-Nov 2023.· Lower price-premium points to supply-demand fundamentals that are too weak to avoid pressure from lower feedstock costs.· More mixed demand signals follows fall in October base oils demand to ten-month low..· Lower demand points to priority of consuming existing supplies first to maintain low stocks.· Strategy points to concern about demand outlook and expectations of easy access to supply as and when required.· Strategy leaves domestic buyers exposed to any stronger-than-expected pick-up in demand over the coming months.· Buyers remain more comfortable with that risk.· China’s demand likely to increase more sharply from 2H Feb 2024, following Chinese new year holidays..· Singapore’s base oils exports to China extend rise last week and over month of Nov 2023..· Sustained rise in shipments follows Singapore’s higher exports to China in Oct 2023.· Rise in shipments to China, and fall in Singapore’s base oils imports from China over month of Nov 2023, point to pick-up in demand following October slowdown..· Any pick-up in Chinese demand would coincide with signs of steady base oils/lube consumption in Japan, which rises in Oct 2023 for third time in four months..· Firmer demand in northeast Asia would consume more of the region’s base oils supplies, cut volumes available for export..· Vietnam’s October base oils imports rise to thirteen-month high..· Vietnam’s base oils imports lag year-earlier levels in 1H 2023, exceed year-earlier levels so far in 2H 2023.· Trend adds to signs of recovery in demand throughout southeast Asia and increases importance of the region as outlet for Asia’s refiners..· Sharp slowdown in Singapore’s base oils exports to India continues throughout month of Nov 2023.· Slowdown in shipments coincides with signs of sustained pick-up in flows from South Korea to India, rise in arbitrage shipments from US to India, and pick-up in flows from Mideast Gulf to India.· Falling prices, signs of more plentiful supply and more plentiful supply options give Indian buyers more leverage to hold back even amid steady domestic demand..Global base oils - week of Dec 4: Demand outlook.Global base oils - week of Dec 4: Price outlook - margins.Global base oils - week of Dec 4: Price outlook - arbitrage
