· India’s base oils prices hold firm relative to prices in Asia, and increasingly relative to prices in US in recent weeks..· India’s very-light grade price premium to Singapore gasoil prices holds relatively firm and in narrower-than-usual range throughout 2024..· India’s firm prices relative to US, to Asia and to Singapore gasoil facilitate arbitrage shipments to the country.· Prices that facilitate arbitrage shipments follow sustained rise in India’s lube demand this year, combined with smaller increase in country’s base oils supply.· Trend leaves supply struggling to keep pace with demand throughout most of the year..· India’s supply struggles to keep pace with demand as country awaits start-up of new base oils production capacity..· India’s supply struggles to keep pace with demand as shrinking supply in rest of Asia this year curbs region’s ability to cover rise in demand..· Asia’s supply falls because of combination of factors including plant maintenance work and drop in production capacity in markets like Japan..· Japan’s lower production slashes volume of supplies available for export..· Drop in Japan’s exports to markets like southeast Asia boosts that region’s demand for alternative supplies from sources like Thailand..· Rise in regional demand for supplies from Thailand cuts its surplus shipments for outlets like India..· Outside Asia, tighter surplus supply in US since start of Q2 2024 curbs India’s arbitrage imports from that country in recent months..· Signs of smaller-than-expected supply-build in US so far in Q4 2024 delays any significant pick-up in arbitrage shipments from that market to India..· India was in previous years a key outlet for surplus supplies from Asia, Europe and US.· Tighter supply-balance in those markets this year reflects various factors such as loss of production capacity or rising production of Group III instead of Group II base oils.· Global base oils market awaits start-up of swathe of new production capacity in various markets in coming year.· Tighter supply balance this year reflects supply gap following recent loss of production and before start-up of new production capacity.· India’s rising demand compounds impact of that supply gap..Asia base oils demand outlook: Week of 11 Nov.Asia base oils supply outlook: Week of 11 Nov.Global base oils margins outlook: Week of 11 Nov.India’s Sept base oils supply shortfall narrows
