Global base oils – week of Oct 17: Supply outlook

·        Diesel premium to crude holding at high end of range over past six months.

·        Strong diesel premium incentivizes refiners to maximise middle distillates output.

·        India’s retail diesel prices unchanged since May, premium to crude stays low.

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

·        High diesel premium to crude incentivizes refiners to maintain high run rates.

·        Base oils plant maintenance takes place in all key regions.

·        Healthy surplus availability, muted demand limits impact of maintenance work.

·        All regions face surplus supplies to clear.

·        Asia-Pacific surplus cargoes previously faced less competition from shipments in other regions.

·        South Korea/Taiwan September exports surge, adding to supply in more distant regions.

·        Wave of Taiwan shipments to Mideast Gulf in September likely to take time to be sold off through region’s ex-tank market.

·        Singapore’s base oils exports from domestic sources stay lower than usual over past month.

·        Singapore’s re-exports from other sources stay unusually low over past month, reflecting sustained slowdown in base oils imports.

·        Singapore’s base oils exports to southeast Asia over past month slip to lowest since May.

·        Singapore’s imports over past week get boost from large shipment from Qatar.

·        Singapore’s four-week average imports from Japan hold below 18,000t since beginning of September.

·        Before September, Singapore’s imports from Japan had fallen below that level just twice in the four months to end-August.

·        Slowdown in Singapore imports from Japan follows closure of Group I plant in Japan at end-September.

·        Shutdown of both of Thailand’s Group I base oils plants this month likely to impact regional Group I supply.

·        Taiwan’s base oils exports show signs of slowing in recent weeks vs Sept/early Oct.

·        Recent surge in domestic Chinese prices likely to boost demand for Taiwan shipments.

·        Any rise in Taiwan shipments to China and drop in shipments to other markets would cut spot supply for Asia-Pacific region.

·        Any such move would curb regional buyers’ concern about downward price-pressure, boost sellers’ willingness to target/maintain higher prices.

·        Any slowdown in Taiwan shipments to other markets likely to have more immediate impact on cargo prices than ex-tank prices.

·        Large cargo of very light grades from Spain reaches India in first two weeks of October.

·        More bright stock of Thai origin reaches India in 1H Oct.

·        Large shipment of Taiwan origin set to reach India this week.

·        Several large shipments from South Korea to reach India over coming week.