Global base oils – week of Nov 14: Supply outlook

·        Global diesel prices hold firm vs crude, down from recent highs.

·        Unusually high diesel premium continues to incentivize refiners to maximise distillates production.

·        Tight diesel supply and prospect of even tighter supply, combined with high prices, provide refiners with ready alternative in face of weak base oils prices.

·        India’s retail diesel premium to crude stays steady and low, reflecting unchanged retail diesel price since May.

·        China’s diesel premium to crude holds close to highest in a year.

·        Prospect of more widespread focus on diesel production at expense of base oils likely to impact base oils supply over coming months and especially early next year.

·        Refinery run rates hold firm in US, Japan.

·        US middle distillates stocks edge down last week, holding close to lowest in 18 years.

·        Germany’s September diesel stocks fall close to lowest in seven years.

·        Many refiners’ firm Q3 base oils profits highlight base oil’s wide premium to crude, even if premium to diesel narrower than usual.

·        Base oil’s firm premium to crude for products like Group III supports strong incentive to maintain/raise production.

·        Refiners face prospect of increasingly synchronised slowdown in lube demand in Americas, Europe, Asia-Pacific.

·        US’ September base oils exports to Europe slump for second month amid signs of lower production.

·        Lower US exports to Europe in Aug-Sep likely outpace slowdown in demand.

·        Trend would need to continue over coming months to avoid supply-build in Europe.

·        US refiner likely restarting base oils unit after scheduled maintenance in October.

·        Brazil’s base oils supply stays more balanced amid lower production, imports.

·        Any pick-up in Chinese demand would consume more Asia-Pacific supplies, curb arbitrage flows to Americas.

·        Any pick-up in Chinese demand so far insufficient to trigger a price adjustment that shuts the arbitrage to the Americas.

·        Asia-Pacific surplus shrinks after clear-out of cargoes in Q3, plant run cuts, plant maintenance work, plant closure.

·        Asia Group I structural supply set to tighten further when another plant closes next year.

·        Thailand’s October exports show signs of falling sharply vs September.

·        India’s October base oils imports rise from September, remain lower than usual.

·        Taiwan’s October base oils exports fall from September, hold firm.

·        Singapore’s four-week average domestic base oil exports extend fall to lowest in more than seven months.

·        Singapore’s four-week average base oils exports to China fall close to lowest since July.

·        Singapore’s four-week average base oils exports to India fall close to lowest since June.

·        Singapore’s four-week average base oils exports to southeast Asia stay higher than usual, especially to Indonesia.

·        Singapore’s total base oils imports over last four weeks remain unusually low.

·        Singapore’s base oils imports from China slow markedly in recent weeks.

·        Singapore’s base oils imports from Japan show signs of reviving.