Global base oils –week of Jul 25: Supply

· Diesel remains unusually high vs crude.

· But diesel premium to crude stays lower than highs in Q2.

· High diesel premium, tight diesel supply incentivize refiners to maintain high run-rates.

· Some signs of high refinery run-rates supporting firm base oils output.

· Surplus set to build as lower crude/diesel prices prompt buyers to hold back.

· Diesel premium to crude stays lower in India, China.

· Refinery run rates stay high in US, China’s Shandong province, stay lower in Japan.

· Timing of plant maintenance work stays spread out rather than clustered so far this year.

· Most plant maintenance work drawing to close.

· US supply faces uncertainty during Atlantic hurricane season, which typically peaks during the two months from 2H August.

· Europe base oils supply tightness likely to ease as maintenance draws to close.

· Supply tightness eases on seasonal slowdown in demand, expectations of lower prices prompt buyers to hold back.

· Italy’s May base oils output rises to seven-month high, ahead of restart of unit.

· Spain/Italy May base oils output rises as share of total refinery output.

· Base oil producers/blenders start releasing 2Q earnings results over coming week.

· Asia base oils availability improves even after recent maintenance/run cuts.

· Supply improves as regional buyers hold back, arbitrage opportunities get harder to work.

· South Korea’s June base oils exports to Asia slump, steadier to Americas.

· China’s June base oils exports surge, add to regional supply.

· Trend shows signs of extending into July.

· Singapore’s June base oils exports recover vs May, hold well below pre-2020 levels.

· Asia surplus persists in June even as base oils exports dip.

· Singapore’s weekly base oil exports rise over past week to highest in more than a month.

· Singapore’s July exports likely to remain low/fall vs June even as shipments rise over past week.

· Singapore’s base oils exports to China remain unusually low over last four weeks.

· Singapore’s base oils exports to Indonesia surge over last four weeks.

· Singapore’s weekly base oils imports rise to five-week high.

· Singapore’s base oils imports over past week include cargo from China. Shipment is largest this year.

· Singapore’s base oils imports from Europe stay close to zero in July for a second month.

· Taiwan’s base oils exports likely to stay lower than usual in July.

· Large cargo from Taiwan set to reach India in coming days.

· July-arrival shipments to Nigeria stay low.

· Kenya’s July base oils imports set to fall sharply vs June.