· Asia’s base oils demand likely to get support from seasonal pick-up in lube consumption, signs of balanced-to-tight supply and expectations of steady-to-firmer prices.· Buyers likely to limit supply-build on concern about strength of seasonal rise in demand and impact of China’s slower growth on other markets.· China’s weak base oils/lube consumption and low price margins deter country’s refiners from raising output ahead of seasonal pick-up in demand from September.· China’s August base oils imports show signs of staying low even with pick-up in shipments from Taiwan.· Domestic blenders show little sign of seeking more supplies, preferring instead to maintain lower stocks and procure on need-to basis.· Trend suggests they expect seasonal rise in demand to be smaller than usual or that supply will be sufficient to cover any immediate requirements..· Japan’s July base oils/lube demand stays mixed, with PCMO consumption staying firm and industry-related lube demand continuing to shrink..· Japan’s firm retail sales growth and weak industrial production suggests trend likely to continue..· Vietnam’s base oils imports show signs of holding firmer than during end-2022 and early this year..· Trend highlights diverse demand dynamics throughout southeast Asia and still-firm demand in some of those markets despite impact of slower-than-expected growth in China..· Thailand’s July base oils exports continue to include arbitrage shipments to markets like UAE/India, despite revival in Chinese demand for bright stock..· Trend points to Thailand’s larger-than-usual volume of surplus supplies to clear each month and weaker demand in southeast Asia..· Singapore’s July base oils exports to southeast Asia hold close to record-high levels.· Trend cushions impact of slower demand in China and India, highlights benefit of diversification.· Rise in shipments to southeast Asia mostly reflects surging shipments to Indonesia..· Trend increases Singapore’s reliance on Indonesia – exports to Indonesia exceed shipments to rest of southeast Asia in July for second time in three months, for third time on record.· Trend highlights more mixed demand in other southeast Asian markets..· Pakistan’s imports of base oils from South Korea fall slightly in 1H 2023 and much less than 34pc slump in total imports.· Trend maintains Pakistan as regular outlet for supplies from South Korea, boosts South Korea’s share of Pakistan’s total imports, contrasts with slump in supplies from Saudi Arabia..· India’s July base oils supply exceeds demand by widest margin in two years..· India’s rising supply surplus leaves buyers with healthy stocks ahead of seasonal pick-up in demand from end-Q3 2023.· Buyers’ healthy stocks could curb strength of pick-up in demand, give buyers more leverage to adjust procurement plans until they deem prices to be at competitive levels.· Buyers would have more leverage if surplus supply were more plentiful.· Prospect of slowdown in arbitrage shipments at least from US and Taiwan to India over coming months likely to limit that leverage..Global base oils - week of Sep 4: Price outlook - margins
· Asia’s base oils demand likely to get support from seasonal pick-up in lube consumption, signs of balanced-to-tight supply and expectations of steady-to-firmer prices.· Buyers likely to limit supply-build on concern about strength of seasonal rise in demand and impact of China’s slower growth on other markets.· China’s weak base oils/lube consumption and low price margins deter country’s refiners from raising output ahead of seasonal pick-up in demand from September.· China’s August base oils imports show signs of staying low even with pick-up in shipments from Taiwan.· Domestic blenders show little sign of seeking more supplies, preferring instead to maintain lower stocks and procure on need-to basis.· Trend suggests they expect seasonal rise in demand to be smaller than usual or that supply will be sufficient to cover any immediate requirements..· Japan’s July base oils/lube demand stays mixed, with PCMO consumption staying firm and industry-related lube demand continuing to shrink..· Japan’s firm retail sales growth and weak industrial production suggests trend likely to continue..· Vietnam’s base oils imports show signs of holding firmer than during end-2022 and early this year..· Trend highlights diverse demand dynamics throughout southeast Asia and still-firm demand in some of those markets despite impact of slower-than-expected growth in China..· Thailand’s July base oils exports continue to include arbitrage shipments to markets like UAE/India, despite revival in Chinese demand for bright stock..· Trend points to Thailand’s larger-than-usual volume of surplus supplies to clear each month and weaker demand in southeast Asia..· Singapore’s July base oils exports to southeast Asia hold close to record-high levels.· Trend cushions impact of slower demand in China and India, highlights benefit of diversification.· Rise in shipments to southeast Asia mostly reflects surging shipments to Indonesia..· Trend increases Singapore’s reliance on Indonesia – exports to Indonesia exceed shipments to rest of southeast Asia in July for second time in three months, for third time on record.· Trend highlights more mixed demand in other southeast Asian markets..· Pakistan’s imports of base oils from South Korea fall slightly in 1H 2023 and much less than 34pc slump in total imports.· Trend maintains Pakistan as regular outlet for supplies from South Korea, boosts South Korea’s share of Pakistan’s total imports, contrasts with slump in supplies from Saudi Arabia..· India’s July base oils supply exceeds demand by widest margin in two years..· India’s rising supply surplus leaves buyers with healthy stocks ahead of seasonal pick-up in demand from end-Q3 2023.· Buyers’ healthy stocks could curb strength of pick-up in demand, give buyers more leverage to adjust procurement plans until they deem prices to be at competitive levels.· Buyers would have more leverage if surplus supply were more plentiful.· Prospect of slowdown in arbitrage shipments at least from US and Taiwan to India over coming months likely to limit that leverage..Global base oils - week of Sep 4: Price outlook - margins