Global base oils – week of Sep 26: Supply outlook

·        Diesel premium to crude edges up, well down from recent highs, well up from pre-February levels.

·        China Shandong diesel premium to crude extends rise to highest in more than a year.

·        India retail diesel premium to crude extends rise – reflecting unchanged diesel price since May.

·        Firm China/India diesel prices incentivize refiners to produce more middle distillates.

·        Prospect of rise in China export quotas for diesel in Q4 could help counter impact of expected drop in oil products supplies from Russia from December.

·        Larger-than-expected diesel supplies could pressure diesel premium to crude.

·        Refinery run rates hold firm in US, Japan.

·        Unusually low Chinese base oils imports continue to force Asia producers to redirect large volumes to other markets.

·        Surge in China’s base oils exports in August adds to regional surplus.

·        South Korea moves record volumes of base oils to Latin America in August.

·        Firmer Asia-Pacific base oils values vs diesel could incentivize higher run rates/reversal of run-cuts, eroding benefit of recent clear-out of surplus supplies.

·        Latin America absorbs supplies from Asia-Pacific, Mideast Gulf.

·        US plant maintenance work over coming months likely to curb size of any supply overhang.

·        US still likely to have surplus volumes to clear after so far avoiding any major weather-related supply disruptions.

·        Europe base oils supply already showed signs of rising in July, with pick-up in shipments to West Africa, Latin America. Trend likely to have continued since then amid slowing European demand.

·        Rising surplus supplies increase need to open arbitrage to outlets like Africa.

·        Turkey less attractive as outlet as rising supplies of Russian base oils cover more of its domestic requirements.

·        Rising arbitrage shipments to Latin America, while demand slows, raise prospect of lower demand from more regular suppliers.

·        Singapore’s base oils exports fall over past week to lowest weekly volume in more than six months.

·        Singapore’s weekly base oils exports from domestic sources fall below levels in May, when some plant maintenance took place.

·        Singapore takes delivery of more cargoes from China over past week, adding to wave of shipments over past two months.

·        Singapore’s four-week average imports volume falls to lowest over past week in more than six months.

·        Trend reflects slump in shipments from Mideast Gulf and slowdown in flows from Japan.

·        Swathe of large shipments load from Taiwan during September.

·        Taiwan’s September shipments rise to highest in months.

·        Cargo with around 20,000t of Group II base oils from Taiwan set to reach India in coming days.

·        Group I base oil plant in Japan set for imminent closure.

·        Closure likely to trigger change in trade flows as supply from Japan falls.

·        Closure coincides with scheduled plant maintenance in Japan.

·        Plant shutdowns in Thailand in Q4 2022 set to cut surplus Group I cargo availability from that market.

·        Large cargo of premium-grade base oils from Spain heads to West Africa.

·        Kenya set to take delivery of no shipments in September, after arrival of unusually large volume in August.