Asia base oils - week of May 8: Demand outlook

·        Asia-Pacific lube demand to stay lower in April-May vs March levels.

·        Lube demand showed signs of typical strong growth throughout Asia-Pacific region in March.

·        Demand showed signs of reverting closer to pre-2020 seasonal trends.

·        Rising domestic demand throughout Asia in March outpaced higher supply in several key markets.

·        Trend likely to reverse in Q2 – with demand falling from end-Q1 levels.

·        Slower demand likely to cushion impact of regional plant maintenance work.

·        More muted demand and expectations that prices likely to remain in narrow range add to attraction of maintaining lower stocks.

·        China’s April base oils demand shows signs of gradual rather than rapid improvement.

·        Trend slows consumption of existing supplies and curbs requirements for overseas shipments.

·        Limited arbitrage opportunities to China add to signs of more muted domestic demand growth.

·        South Korea’s March base oils demand rises to thirteen-month high, contrasting with more muted rise in domestic production and curbing volumes available for export.

·        Thailand’s March lube demand rises to highest in a year, leaving base oils producers with lower stocks.

·        Thailand’s demand typically falls in April before improving in May.

·        India’s base oils demand likely to stay muted as country takes delivery of more arbitrage supplies from US over coming weeks.

·        India’s April base oils imports already show signs of getting boost from arrival of arbitrage supplies from US/Europe.

·        Volatile crude prices and signs of healthy availability of supply add to attraction for Indian buyers to maintain lower stocks.