· Gasoil prices fall faster than crude, cutting premium to crude to lowest since Q1 2022.· Gasoil premium to crude remains historically high, maintains incentive for refiners to focus on middle distillates production, especially when base oils premium to diesel is weak.· India’s retail diesel premium to crude oil holds firm amid steady diesel prices since last May.· China’s Shandong province diesel premium to crude rebounds. Domestic diesel demand likely to recover after sharp seasonal slowdown during lunar new year holidays..· Global refinery run rates stay high amid strong margins..· EU ban on Russian base oils imports comes into effect on February 5.· European buyers previously typically bought large volumes of Russian base oils at start of new year. The supplies helped to cover for drop in base oils production during scheduled maintenance work in the region.· That supply buffer no longer there this year.· Russian refiners face pressure to line up alternative outlets in place of European market.· Capacity for Turkey to absorb even more Russian base oils likely to be limited.· Netherlands’ November base oils output stays firm, but stocks fall to 13-month low on rise in refinery consumption..· Netherlands’ low stocks at year-end coincide with falling base oils output in Spain and Italy.· Trend suggests European refiners’ supply surplus at start of this year may be smaller than usual, that demand weakness at start of new year outweighed the smaller surplus.· If so, supply could tighten faster than expected when demand revives.· Shipments of premium-grade base oils from Spain show signs of rebounding in January, easing Group III supply tightness late last year.· US’ November base oils output stays low in narrow range despite end of plant maintenance work.· Low output coincides with signs of US refiners focusing on maximising distillates production, curbing base oils supply-build at year-end.· US output likely to stay low early this year because of scheduled plant maintenance work, firm diesel prices.· Argentina’s December base oils production rises to seven-month high. It will need to remain at higher levels over coming months to cover for drop in arbitrage imports, especially from Asia-Pacific.· Argentina’s higher December base oils output insufficient to balance out drop in imports, triggering fall in supply to five-month low..· Slowdown in arbitrage shipments to Latin American countries like Argentina and Brazil likely to continue as Asia producers focus on demand in their region. · Reviving Chinese consumption likely to lead pick-up in demand in Asia-Pacific region.· Firmer consumption contrasts with China’s range-bound and low base oils output in January, close to levels over previous four months..· Chinese producers’ base oils supply tightens because of maintenance work and refiners’ focus on producing motor fuels.· Chinese refiners’ tight base oils supply increases reliance on regional supplies to cover requirements.· China’s rebounding domestic Group II base oils prices could trigger knock-on effect on regional prices, impacting trade flows.· Firmer Chinese demand follows increasingly steep fall in Asia-Pacific base oils exports at end-2022, curbing regional supply-build at start of this year.· Slowdown in Japan’s base oils output and exports in recent months likely to continue in 2023.· Japan’s surge in production/exports in 2022 helped to cushion Singapore’s lower base oils exports vs levels in 2020.· Slowdown in Japan’s 2023 base oils supply would remove that cushion.· Singapore’s four-week average base oils exports to end-January rise versus recent months.· Share of Singapore’s base oils exports to southeast Asia falls over past four weeks.· Singapore’s base oils imports stay unusually low over last four weeks.· Group III base oils exports from Indonesia fall even further in December to kind of levels that suggest change in production flows such as plant maintenance work..· Indonesia’s Group III shipments in December include no supplies for Netherlands for first time in nine months.· India’s January base oils imports show signs of staying unusually low even as they improve from December.· India’s January base oils imports show signs of rising on back of arrival of arbitrage supplies from US, rebound in shipments from Qatar and UAE..Global base oils - week of Feb 6: Demand outlook
· Gasoil prices fall faster than crude, cutting premium to crude to lowest since Q1 2022.· Gasoil premium to crude remains historically high, maintains incentive for refiners to focus on middle distillates production, especially when base oils premium to diesel is weak.· India’s retail diesel premium to crude oil holds firm amid steady diesel prices since last May.· China’s Shandong province diesel premium to crude rebounds. Domestic diesel demand likely to recover after sharp seasonal slowdown during lunar new year holidays..· Global refinery run rates stay high amid strong margins..· EU ban on Russian base oils imports comes into effect on February 5.· European buyers previously typically bought large volumes of Russian base oils at start of new year. The supplies helped to cover for drop in base oils production during scheduled maintenance work in the region.· That supply buffer no longer there this year.· Russian refiners face pressure to line up alternative outlets in place of European market.· Capacity for Turkey to absorb even more Russian base oils likely to be limited.· Netherlands’ November base oils output stays firm, but stocks fall to 13-month low on rise in refinery consumption..· Netherlands’ low stocks at year-end coincide with falling base oils output in Spain and Italy.· Trend suggests European refiners’ supply surplus at start of this year may be smaller than usual, that demand weakness at start of new year outweighed the smaller surplus.· If so, supply could tighten faster than expected when demand revives.· Shipments of premium-grade base oils from Spain show signs of rebounding in January, easing Group III supply tightness late last year.· US’ November base oils output stays low in narrow range despite end of plant maintenance work.· Low output coincides with signs of US refiners focusing on maximising distillates production, curbing base oils supply-build at year-end.· US output likely to stay low early this year because of scheduled plant maintenance work, firm diesel prices.· Argentina’s December base oils production rises to seven-month high. It will need to remain at higher levels over coming months to cover for drop in arbitrage imports, especially from Asia-Pacific.· Argentina’s higher December base oils output insufficient to balance out drop in imports, triggering fall in supply to five-month low..· Slowdown in arbitrage shipments to Latin American countries like Argentina and Brazil likely to continue as Asia producers focus on demand in their region. · Reviving Chinese consumption likely to lead pick-up in demand in Asia-Pacific region.· Firmer consumption contrasts with China’s range-bound and low base oils output in January, close to levels over previous four months..· Chinese producers’ base oils supply tightens because of maintenance work and refiners’ focus on producing motor fuels.· Chinese refiners’ tight base oils supply increases reliance on regional supplies to cover requirements.· China’s rebounding domestic Group II base oils prices could trigger knock-on effect on regional prices, impacting trade flows.· Firmer Chinese demand follows increasingly steep fall in Asia-Pacific base oils exports at end-2022, curbing regional supply-build at start of this year.· Slowdown in Japan’s base oils output and exports in recent months likely to continue in 2023.· Japan’s surge in production/exports in 2022 helped to cushion Singapore’s lower base oils exports vs levels in 2020.· Slowdown in Japan’s 2023 base oils supply would remove that cushion.· Singapore’s four-week average base oils exports to end-January rise versus recent months.· Share of Singapore’s base oils exports to southeast Asia falls over past four weeks.· Singapore’s base oils imports stay unusually low over last four weeks.· Group III base oils exports from Indonesia fall even further in December to kind of levels that suggest change in production flows such as plant maintenance work..· Indonesia’s Group III shipments in December include no supplies for Netherlands for first time in nine months.· India’s January base oils imports show signs of staying unusually low even as they improve from December.· India’s January base oils imports show signs of rising on back of arrival of arbitrage supplies from US, rebound in shipments from Qatar and UAE..Global base oils - week of Feb 6: Demand outlook
