· Asia Group II heavy-neutrals prices rise versus light grades, versus Group I heavy-neutrals prices and versus other regions, ICIS data shows.
· Firmer Asia prices contrast with weaker US Group II heavy-grade prices versus light grades and versus Group I heavy-neutrals base oils.
· Firmer Asia prices contrast with weaker Europe Group II heavy-grade prices versus light grades and steady levels vs Group I prices.
· Firmer prices point to tighter supply and stronger demand in Asia compared with other regions.
· Asia’s Group II heavy-grade price reverts to premium to Group I SN 500 for first time since mid-November 2023.
· Group II heavy-grade prices slipped to discount to SN 500 in late-2023 and early 2024 amid increasingly firm fundamentals for Group I heavy grades.
· Asia’s Group I supply tightened from Q4 2023 in response to plant closure in Japan, plant maintenance in Thailand, limited exports from Europe to Asia, and logistical disruptions in Red Sea market.
· Tighter Group I supply and higher prices incentivize blenders to use more Group II heavy grades instead.
· Asia’s Group II heavy-grade price premium to Group II N150 rises to highest in more than two years.
· Group II heavy-grade premium widens amid more plentiful availability of Group II light grades, which also face pressure from increasingly competitive prices for supplies of Group III base oils.
· Strength of Group II heavy-grade prices fails to extend beyond Asia.
· US Group II heavy-grade price premium to Group I heavy neutrals falls steadily since mid-2023 to lowest in more than a year; premium to Group II light grades falls to lowest since late-2022.
· Europe’s Group II heavy-grade price premium to Group I heavy neutrals stays range-bound since mid-Nov 2023; premium to Group II light grades holds close to narrowest in almost three years.
· Recent strength of Asia Group II heavy-grade prices vs US/Europe heavy grades points to fundamentals-related factors specific to Asia-Pacific region.
· Asia’s Group II prices typically reach a level that incentivizes blenders to use more Group I base oils instead.
· Tighter availability of Group I base oils in Asia is likely to limit such moves in the coming months.
· Trend raises prospect of Asia Group II heavy grades staying firmer for longer.
