Global base oils – week of 3 May: Supply

· Group I/II producers face more incentive to produce diesel.

· Group III producers face less incentive to switch to producing diesel. Challenge is feedstock supply.

· Producers focus on covering term commitments, less surplus for other buyers.

· Europe faces ongoing challenge of tight Group I and Group II supply.

· Dwindling supplies from Russia coincide with Group I plant maintenance in Europe.

· US Group II supply shows signs of sustained drop in production, tighter availability.

· US Group II exports to Europe already slumped in February.

· Buyers most reliant on spot supplies likely to face growing challenge securing supply.

· Netherlands’ February base oils consumption absorbs unusually large share of country’s output.

· Wave of supplies from Netherlands continues to reach Singapore in April.

· Nigeria’s base oil imports in April rise vs March.

· Asia supply looks more balanced.

· But high freight costs and sporadic spot supply limit arbitrage opportunities to move product to Europe.

· Thailand’s base oil plant maintenance work appears to have taken place in February, rather than March.

· Large flow of shipments from Japan to Spore in April coincides with jump in Japanese base oils production.

· Taiwan’s April base oil exports slump vs March, with light grades lagging heavy grades.

· Taiwan’s exports show signs of improving in May.

· Singapore April shipments show signs of falling vs high March levels.

· Singapore April shipments to China fall vs March levels.

· Singapore April shipments to Indonesia, India rise from March levels

· Singapore April shipments include large cargo to Malta – first in seven months.

· India - arrival of supplies from South Korea, US, Singapore, UAE, Saudi Arabia at end-Apr/ over coming week.