· Europe Group II base oil premium to diesel edges down, holds at lower end of one-year range. Premium typically rises from around this time of the year.· Asia Group II base oil premium to diesel edges down, holds close to highest since early December..· Asia/Europe Group I premium to diesel gets boost from higher bright stock prices vs SN 150/SN 500.· US Group II base oil prices maintain steep premium to heating oil.· India diesel premium to regional Group II light-grade base oil prices holds firm, close to ten-month high, boosting attraction of imports.· China’s domestic Group II N150 premium to Shandong diesel prices edges down, stays well above Jan-Oct 2022 levels, well below Nov 2022 peak..· China’s lower N150 premium vs Nov 2022 suggests fundamentals remain insufficiently strong to drive prices higher.· China’s relatively muted price rise in recent weeks, and marginal arbitrage for supplies from Asia-Pacific, similarly suggests the strength of a recovery in demand is so far relatively muted.· Trend contrasts with wide-open arbitrage to move shipments to China in Q2-Q3 2020, following end of country’s first nationwide lockdown.· Asia Group I price discount to Europe prices stays narrow – sustaining competitiveness of European supplies to markets like Mideast Gulf/India.· Asia Group II heavy-grade discount to Europe/US prices stays wide – making arbitrage feasible westwards and eastwards.· Smaller Asia Group II light-grade discount vs Europe/US makes that arbitrage less feasible.· Europe Group III prices firm relative to US and Asia prices – boosting attraction of moving more shipments to Europe.· Firmer European Group III prices vs other regions suggest tighter fundamentals in Europe.· Europe Group III premium to Group I/II prices widens – boosting attraction of switching away from Group III if feasible.· Europe Group I heavy-neutrals premium to light grades stays narrow; Group II heavy neutrals premium to light grades stays wide.· Narrower Group I premium boosts attraction of using SN 500 instead of Group II heavy grades.· Group II light-grade premium to Group I SN 150 continues to narrow – boosting attraction of using Group II.· Asia Group I heavy-neutrals premium to light grades increases to widest this year.· Asia Group II maintains premium to Group I – but still narrower than usual – incentivizing more consumption of Group II.· Fob Asia Group I bright stock discount to domestic Chinese prices stays narrower than in November 2022, complicating arbitrage.· Fob Asia Group II light-grade discount to domestic Chinese prices stays narrower than in November 2022, complicating arbitrage.· Fob Asia Group II heavy-grade discount to domestic Chinese prices stays wider than in November 2022, narrower than January 2023 – arbitrage more attractive than for light grades.· Lack of significant domestic Chinese price reaction to narrower bright stock / Group II light-grade premium to fob Asia prices suggests sufficient supply and weaker-than-expected rise in Chinese demand..Global base oils - week of Feb 27: Supply outlook
· Europe Group II base oil premium to diesel edges down, holds at lower end of one-year range. Premium typically rises from around this time of the year.· Asia Group II base oil premium to diesel edges down, holds close to highest since early December..· Asia/Europe Group I premium to diesel gets boost from higher bright stock prices vs SN 150/SN 500.· US Group II base oil prices maintain steep premium to heating oil.· India diesel premium to regional Group II light-grade base oil prices holds firm, close to ten-month high, boosting attraction of imports.· China’s domestic Group II N150 premium to Shandong diesel prices edges down, stays well above Jan-Oct 2022 levels, well below Nov 2022 peak..· China’s lower N150 premium vs Nov 2022 suggests fundamentals remain insufficiently strong to drive prices higher.· China’s relatively muted price rise in recent weeks, and marginal arbitrage for supplies from Asia-Pacific, similarly suggests the strength of a recovery in demand is so far relatively muted.· Trend contrasts with wide-open arbitrage to move shipments to China in Q2-Q3 2020, following end of country’s first nationwide lockdown.· Asia Group I price discount to Europe prices stays narrow – sustaining competitiveness of European supplies to markets like Mideast Gulf/India.· Asia Group II heavy-grade discount to Europe/US prices stays wide – making arbitrage feasible westwards and eastwards.· Smaller Asia Group II light-grade discount vs Europe/US makes that arbitrage less feasible.· Europe Group III prices firm relative to US and Asia prices – boosting attraction of moving more shipments to Europe.· Firmer European Group III prices vs other regions suggest tighter fundamentals in Europe.· Europe Group III premium to Group I/II prices widens – boosting attraction of switching away from Group III if feasible.· Europe Group I heavy-neutrals premium to light grades stays narrow; Group II heavy neutrals premium to light grades stays wide.· Narrower Group I premium boosts attraction of using SN 500 instead of Group II heavy grades.· Group II light-grade premium to Group I SN 150 continues to narrow – boosting attraction of using Group II.· Asia Group I heavy-neutrals premium to light grades increases to widest this year.· Asia Group II maintains premium to Group I – but still narrower than usual – incentivizing more consumption of Group II.· Fob Asia Group I bright stock discount to domestic Chinese prices stays narrower than in November 2022, complicating arbitrage.· Fob Asia Group II light-grade discount to domestic Chinese prices stays narrower than in November 2022, complicating arbitrage.· Fob Asia Group II heavy-grade discount to domestic Chinese prices stays wider than in November 2022, narrower than January 2023 – arbitrage more attractive than for light grades.· Lack of significant domestic Chinese price reaction to narrower bright stock / Group II light-grade premium to fob Asia prices suggests sufficient supply and weaker-than-expected rise in Chinese demand..Global base oils - week of Feb 27: Supply outlook
