· Diesel prices maintain lower premium vs crude oil over past month; premium remains much higher than pre-Feb 2022 levels.· Firm diesel premium vs typical levels continues to incentivize refiners to prioritise middle distillates production.· India’s retail diesel premium to discounted crude oil prices remains high – incentivizing refiners to maintain high run-rates.· China’s Shandong diesel premium to crude oil holds steady – low vs late-2022 levels, high vs pre-Aug 2022 levels..· Plant maintenance work/run-cuts cuts supply in US, Europe, China, southeast Asia.· Lower supply coincides with seasonal rise in demand.· Supply shows signs of staying sufficient even as fundamentals tighten and Russian supplies struggle for outlets.· Expectations of steady availability of supply curb producers’ incentive to hold back availability to lock in higher prices.· Such moves previously had exacerbated supply tightness and supported higher prices.· US’ January base oils exports rebound, adding to supply and pressure on prices early in the year.· Higher US exports raise prospect of more balanced domestic supply.· Surge in US exports to Europe in January compound region’s surplus supply, especially of Group II base oils..· US exports to Europe show signs of slowing in February.· Surge in arbitrage shipments to Argentina in 2H 2022 coincide with slowing demand, triggering supply-build.· Argentina’s supply falls in early 2023, clearing surplus.· Argentina’s domestic production and flows from US hold steadier even as supply falls, amid drop in arbitrage shipments.· Any rise in surplus Asia-Pacific/Mideast Gulf/Europe supplies over coming months would likely target markets like Argentina again.· Latin America could also be attractive destination for supplies of Russian origin amid need for Group I base oils, stiff competition in other outlets.· Spain’s base oils supply stays lower than usual at end-2022.· European buyers’ moves to cut stocks and delay replenishment outweighs signs of lower supply.· Surplus Group I supplies from Europe move to Mideast Gulf, Latin America in first two months of the year.· Surplus supply from Europe likely to fall over coming months on run-cuts, plant maintenance, dwindling Russian supplies, firmer demand.· Indonesia’s Group III base oils exports to Europe stay unusually low in January, compounding slowdown from South Korea and keeping European supply tight early this year.· Indonesia’s Group III base oils exports to Europe show signs of reviving in February, adding to signs of easing supply-tightness in Europe.· Asia-Pacific January base oils exports rise to four-month high; February exports show signs of staying firm..· Asia’s surplus supply likely to be lower this year than last year, even if Chinese demand lags expectations, because of heavier round of plant maintenance work.· South Korea’s January base oils output stays low, while diesel output rises.· Price dynamic that incentivizes such moves changes in February and March - trend could incentivize rise in output.· Uncertainty about strength of China’s pick-up in demand add to refiners’ incentive to cut base oils output and focus on middle distillates.· Taiwan’s February base oils exports fall, but shipments to China rise – curbing flows to other regions.· Thailand’s base oils exports likely to fall from four-month high in January on seasonal pick-up in domestic demand.· Japan’s base oils exports to Singapore show signs of slowing in February.· Japan’s base oils shipments to Thailand already fall in recent months.· Trend likely to continue and force buyers to line up alternative supplies instead.· Singapore’s four-week average base oils exports rise last week to more than 200,000t for first time in more than a year..Global base oils – week of March 13: Demand outlook
· Diesel prices maintain lower premium vs crude oil over past month; premium remains much higher than pre-Feb 2022 levels.· Firm diesel premium vs typical levels continues to incentivize refiners to prioritise middle distillates production.· India’s retail diesel premium to discounted crude oil prices remains high – incentivizing refiners to maintain high run-rates.· China’s Shandong diesel premium to crude oil holds steady – low vs late-2022 levels, high vs pre-Aug 2022 levels..· Plant maintenance work/run-cuts cuts supply in US, Europe, China, southeast Asia.· Lower supply coincides with seasonal rise in demand.· Supply shows signs of staying sufficient even as fundamentals tighten and Russian supplies struggle for outlets.· Expectations of steady availability of supply curb producers’ incentive to hold back availability to lock in higher prices.· Such moves previously had exacerbated supply tightness and supported higher prices.· US’ January base oils exports rebound, adding to supply and pressure on prices early in the year.· Higher US exports raise prospect of more balanced domestic supply.· Surge in US exports to Europe in January compound region’s surplus supply, especially of Group II base oils..· US exports to Europe show signs of slowing in February.· Surge in arbitrage shipments to Argentina in 2H 2022 coincide with slowing demand, triggering supply-build.· Argentina’s supply falls in early 2023, clearing surplus.· Argentina’s domestic production and flows from US hold steadier even as supply falls, amid drop in arbitrage shipments.· Any rise in surplus Asia-Pacific/Mideast Gulf/Europe supplies over coming months would likely target markets like Argentina again.· Latin America could also be attractive destination for supplies of Russian origin amid need for Group I base oils, stiff competition in other outlets.· Spain’s base oils supply stays lower than usual at end-2022.· European buyers’ moves to cut stocks and delay replenishment outweighs signs of lower supply.· Surplus Group I supplies from Europe move to Mideast Gulf, Latin America in first two months of the year.· Surplus supply from Europe likely to fall over coming months on run-cuts, plant maintenance, dwindling Russian supplies, firmer demand.· Indonesia’s Group III base oils exports to Europe stay unusually low in January, compounding slowdown from South Korea and keeping European supply tight early this year.· Indonesia’s Group III base oils exports to Europe show signs of reviving in February, adding to signs of easing supply-tightness in Europe.· Asia-Pacific January base oils exports rise to four-month high; February exports show signs of staying firm..· Asia’s surplus supply likely to be lower this year than last year, even if Chinese demand lags expectations, because of heavier round of plant maintenance work.· South Korea’s January base oils output stays low, while diesel output rises.· Price dynamic that incentivizes such moves changes in February and March - trend could incentivize rise in output.· Uncertainty about strength of China’s pick-up in demand add to refiners’ incentive to cut base oils output and focus on middle distillates.· Taiwan’s February base oils exports fall, but shipments to China rise – curbing flows to other regions.· Thailand’s base oils exports likely to fall from four-month high in January on seasonal pick-up in domestic demand.· Japan’s base oils exports to Singapore show signs of slowing in February.· Japan’s base oils shipments to Thailand already fall in recent months.· Trend likely to continue and force buyers to line up alternative supplies instead.· Singapore’s four-week average base oils exports rise last week to more than 200,000t for first time in more than a year..Global base oils – week of March 13: Demand outlook
