· Asia’s Group II base oils price discount narrows vs prices in northeast Asia, India, Europe and US in recent weeks..· Asia’s narrowing Group II price discount to overseas markets makes arbitrage harder to work.· Simultaneous narrowing of Asia price discount to prices in key overseas markets points to smaller-than-usual supply surplus in Asia for the time of year, supporting firmer prices relative to other regions.· Seasonal rise in lube demand and upcoming plant maintenance work likely to cut Asia’s base oils supply further later in Q1 2025.· Asia’s narrowing price discount to other markets could alternatively point to weaker import demand in those overseas markets.· Premium of CFR India Group II prices to FOB Asia prices falls in Jan 2025 to narrowest since start of Q4 2024..· Narrower premium complicates arbitrage for shipments from Asia, pointing to weaker demand, or sufficient supplies from other sources to cover India's requirements.· India’s base oils output rises to six-month high in Nov 2024 after sustained dip in output Q3 2024..· India’s base oils output set to extend gains this year as new production capacity comes online..· US base oils exports to India rebound to fourteen-month high in Nov 2024..· Rise in shipments, and prospect of additional shipments since then, provide buyers in India with another alternative supply source..· Premium of domestic China Group II N150 prices over FOB Asia prices narrows steadily from start of Q4 2024..· Narrower premium complicates arbitrage to move more shipments to China.· Less feasible arbitrage coincides with rise in China’s base oils output in Dec 2024 and throughout last year..· Premium of domestic Europe Group II N500 over FOB NE Asia prices falls in Jan 2025 to lowest since 2021..· Lower premium coincides with sustained rise in Europe’s regional Group II base oils output from Q2 2024..· Dynamic suggests those markets' weaker demand for supplies from Asia at least partly reflects impact of rising supply from other sources rather than just sharp drop in outright consumption.· Prospect of tighter surplus supply in Asia later in Q1 2025 curbs impact of less feasible arbitrage to those other markets.· Any improvement in supplies in Asia by contrast would increase the impact of less feasible arbitrage to other markets, putting pressure on the arbitrage to re-open.· Healthy availability of supplies in those other markets could conversely complicate a revival of arbitrage opportunities for shipments from Asia.· That scenario, and subsequent resolution of that scenario, is likely to materialize later in 2025..Global base oils margins outlook: Week of 20 Jan.Asia base oils demand outlook: Week of 20 Jan.Asia base oils supply outlook: Week of 20 Jan
· Asia’s Group II base oils price discount narrows vs prices in northeast Asia, India, Europe and US in recent weeks..· Asia’s narrowing Group II price discount to overseas markets makes arbitrage harder to work.· Simultaneous narrowing of Asia price discount to prices in key overseas markets points to smaller-than-usual supply surplus in Asia for the time of year, supporting firmer prices relative to other regions.· Seasonal rise in lube demand and upcoming plant maintenance work likely to cut Asia’s base oils supply further later in Q1 2025.· Asia’s narrowing price discount to other markets could alternatively point to weaker import demand in those overseas markets.· Premium of CFR India Group II prices to FOB Asia prices falls in Jan 2025 to narrowest since start of Q4 2024..· Narrower premium complicates arbitrage for shipments from Asia, pointing to weaker demand, or sufficient supplies from other sources to cover India's requirements.· India’s base oils output rises to six-month high in Nov 2024 after sustained dip in output Q3 2024..· India’s base oils output set to extend gains this year as new production capacity comes online..· US base oils exports to India rebound to fourteen-month high in Nov 2024..· Rise in shipments, and prospect of additional shipments since then, provide buyers in India with another alternative supply source..· Premium of domestic China Group II N150 prices over FOB Asia prices narrows steadily from start of Q4 2024..· Narrower premium complicates arbitrage to move more shipments to China.· Less feasible arbitrage coincides with rise in China’s base oils output in Dec 2024 and throughout last year..· Premium of domestic Europe Group II N500 over FOB NE Asia prices falls in Jan 2025 to lowest since 2021..· Lower premium coincides with sustained rise in Europe’s regional Group II base oils output from Q2 2024..· Dynamic suggests those markets' weaker demand for supplies from Asia at least partly reflects impact of rising supply from other sources rather than just sharp drop in outright consumption.· Prospect of tighter surplus supply in Asia later in Q1 2025 curbs impact of less feasible arbitrage to those other markets.· Any improvement in supplies in Asia by contrast would increase the impact of less feasible arbitrage to other markets, putting pressure on the arbitrage to re-open.· Healthy availability of supplies in those other markets could conversely complicate a revival of arbitrage opportunities for shipments from Asia.· That scenario, and subsequent resolution of that scenario, is likely to materialize later in 2025..Global base oils margins outlook: Week of 20 Jan.Asia base oils demand outlook: Week of 20 Jan.Asia base oils supply outlook: Week of 20 Jan
