· Asia’s base oils prices strengthen relative to prices in Europe and US in recent weeks..· Asia’s rising prices relative to Europe and US coincide with tighter supply in recent months, adding to drop in supply throughout the year..· Asia’s rising price relative to Europe and US coincides with signs of improving surplus availability in those markets.· Asia’s rising price differential makes arbitrage more feasible from those markets for some grades, but still hard to work.· Singapore sees pick-up in shipments from US and especially Europe even with closed arbitrage from that market..· Southeast Asia already sees steady flow of shipments from Europe and US throughout the year despite closed arbitrage.· More of the shipments originated from US in H1 2024, and less from Europe.· More of the shipments originated from Europe in Sept 2024, and less from US.· That new trend shows signs of extending at least through Oct 2024, with another cargo from Europe set to reach Singapore in Nov 2024..· Pick-up in flows from Europe to southeast Asia contrasts with signs of slowdown in shipments from US to southeast Asia in Q3 2024..· Pick-up in shipments from Europe to southeast Asia includes supplies from countries that produce Group I base oils and Group II base oils.· Pick-up in shipments from Europe to southeast Asia could reflect and help to limit rise in surplus volumes in Europe.· Slower rise in surplus volumes in Europe could ease downward pressure on prices in that market.· Smaller surplus and more muted downward pressure on prices in Europe would make more feasible additional arbitrage shipments to that market from US.· US Group II export price differential to FCA Europe prices already widens steadily in recent weeks to widest discount in five months..· More feasible arbitrage boosts attraction of moving more surplus supplies from US to Europe.· Any such moves could delay for longer any pick-up in US shipments to other markets.
