Global base oils – week of Sep 19: Supply outlook

·        Diesel premium to crude falls close to two-month low, still much higher than usual.

·        Firm diesel prices continue to incentivize focus on middle distillates production.

·        India’s retail diesel premium to crude rises to four-month high, reflecting unchanged diesel prices since May while crude is lower.

·        China’s Shandong diesel premium to crude extends rise to highest this year amid firm domestic diesel demand.

·        Refinery run rates hold firm in US, Japan.

·        Drop in US base oils posted prices suggests supply no longer justifies current margins.

·        US base oils buyers/sellers prepared for weather-related supply buffer that has so far not been required.

·        US base oils plant maintenance work likely to limit any supply overhang.

·        Staggered US plant maintenance work likely to curb impact of shutdowns, avoid sharper drop in supply.

·        US base oils exports rebound in July, suggesting improvement in production.

·        US base oils exports stayed high even with recent maintenance work.

·        Rise in Russia base oils shipments to Turkey soften impact of slowdown in shipments to Europe.

·        Easing Europe supply tightness boosts need to clear surplus.

·        Europe set to face competition from other sources for arbitrage outlets.

·        Asia-Pacific plant maintenance/run-cuts, combined with firmer demand, likely to trim surplus supply.

·        Steady flow of Asia-Pacific arbitrage shipments cuts surplus further.

·        Any improvement in Chinese demand would soak up additional Asia-Pacific supplies.

·        South Korea’s August base oils exports fall to second lowest in past 15 months.

·        Slowdown follows drop in South Korea’s July base oils output as share of refined products output to lowest in 15 months. Lower output coincides with low margins.

·        Re-exported base oils as share of Singapore’s base oils exports fall to lowest in nine months.

·        Trend reflects Singapore’s shrinking base oils imports / role as redistribution point.

·        Singapore’s 4-week average exports to China improve from July, still much lower than pre-April levels.

·        Singapore’s 4-week average exports to India continue to ease vs April-July levels.

·        Singapore takes delivery of another cargo from China over past week.

·        Singapore takes delivery of more than 5,000t from China over past month.

·        Taiwan cargo with more than 20,000t of Group II base oils heads for SE Asia.

·        India takes delivery of large volume of supplies from Saudi Arabia and China in early September.

·        India September imports from China consist mostly of Group I light grades.

·        More very light grades of Spanish origin reach India in 1H September.

·        India takes delivery in 1H September of first Group I cargo from Thailand in three months.