· US base oils prices rebound in May 2024 amid steady demand, tighter supply.· India’s Group II imported base oils cargo prices fall in H2 May 2024 as wave of imports replenish blenders’ stocks.· Falling imported cargo prices contrast with rising FOB US cargo prices and firm FOB NE Asia cargo prices.· Diverging price trends trigger fall in India’s imported light-grade cargo prices to discount to US and Asia prices.· Closed arbitrage to markets like India, Middle East and China likely to have more immediate impact on FOB Asia cargo market, followed by US market.· FOB NE Asia Group II N150 discount to domestic Chinese prices narrows to around $270/tonne in May 2024, from close to $400/tonne in Jan 2024..· Less feasible arbitrage to China prompts regional refiners to target other markets such as southeast Asia and India with more shipments in Q2 2024..· FOB NE Asia Group II N150 price flips to premium to CFR India prices in May 2024 for first time in years, from discount of more than $70/tonne in March 2024..· Firmer FOB NE Asia Group II prices relative to prices in India and Middle East make that arbitrage less feasible too..· Less feasible arbitrage leaves Asia’s refiners facing build-up of surplus supplies over coming months unless they cut production or move shipments to more distant markets like Latin America.· Recent rebound in US base oils prices makes more feasible the arbitrage to move Group II shipments from Asia to Latin America, especially for heavy grades.· Any additional rise in US domestic and export prices would further facilitate such moves and curb the size of any adjustment in FOB Asia prices to make arbitrage workable.· US Group II N600 export prices flip back to premium of more than $50/tonne to FOB NE Asia cargo prices in May 2024, from discount of more than $120/tonne in March 2024.· Premium of US Group II N600 domestic prices to FOB Asia prices recovers to more than $430/tonne, halting a sustained slide since early 2024..· Widening US heavy-grade premium adds to feasibility of moving shipments from Asia to Latin America.· An extension of current price trends and any such arbitrage flows would limit build-up of surplus heavy-grade supplies in Asia, curbing downward pressure on prices.· Any additional arbitrage shipments from Asia to Latin America would cover a larger share of requirements in that region, repeating a similar trend in H2 2022.· Any additional arbitrage shipments of heavy grades from Asia to Latin America could in turn compound any build-up of surplus supplies in US market over the coming months, also repeating a similar trend in H2 2022..· US Group II export light-grade prices revert to premium to FOB Asia prices in H2 May 2024 and for first time since beginning of Feb 2024.· US Group II domestic light-grade premium to FOB Asia price edges up, stays much lower than US heavy-grade premium to FOB Asia cargo prices..· Price trends and less feasible arbitrage to clear surplus Group II light grades from Asia raise prospect of build-up of surplus volumes in the region unless output or prices fall.· A lack of any additional arbitrage shipments of light grades from Asia to the Americas would leave that region more reliant on supplies from the US, whose Group II light-grade availability tightened in Q2 2024..Global base oils margins outlook: Week of 3 June.Asia base oils demand outlook: Week of 3 June.Asia base oils supply outlook: Week of 3 June
· US base oils prices rebound in May 2024 amid steady demand, tighter supply.· India’s Group II imported base oils cargo prices fall in H2 May 2024 as wave of imports replenish blenders’ stocks.· Falling imported cargo prices contrast with rising FOB US cargo prices and firm FOB NE Asia cargo prices.· Diverging price trends trigger fall in India’s imported light-grade cargo prices to discount to US and Asia prices.· Closed arbitrage to markets like India, Middle East and China likely to have more immediate impact on FOB Asia cargo market, followed by US market.· FOB NE Asia Group II N150 discount to domestic Chinese prices narrows to around $270/tonne in May 2024, from close to $400/tonne in Jan 2024..· Less feasible arbitrage to China prompts regional refiners to target other markets such as southeast Asia and India with more shipments in Q2 2024..· FOB NE Asia Group II N150 price flips to premium to CFR India prices in May 2024 for first time in years, from discount of more than $70/tonne in March 2024..· Firmer FOB NE Asia Group II prices relative to prices in India and Middle East make that arbitrage less feasible too..· Less feasible arbitrage leaves Asia’s refiners facing build-up of surplus supplies over coming months unless they cut production or move shipments to more distant markets like Latin America.· Recent rebound in US base oils prices makes more feasible the arbitrage to move Group II shipments from Asia to Latin America, especially for heavy grades.· Any additional rise in US domestic and export prices would further facilitate such moves and curb the size of any adjustment in FOB Asia prices to make arbitrage workable.· US Group II N600 export prices flip back to premium of more than $50/tonne to FOB NE Asia cargo prices in May 2024, from discount of more than $120/tonne in March 2024.· Premium of US Group II N600 domestic prices to FOB Asia prices recovers to more than $430/tonne, halting a sustained slide since early 2024..· Widening US heavy-grade premium adds to feasibility of moving shipments from Asia to Latin America.· An extension of current price trends and any such arbitrage flows would limit build-up of surplus heavy-grade supplies in Asia, curbing downward pressure on prices.· Any additional arbitrage shipments from Asia to Latin America would cover a larger share of requirements in that region, repeating a similar trend in H2 2022.· Any additional arbitrage shipments of heavy grades from Asia to Latin America could in turn compound any build-up of surplus supplies in US market over the coming months, also repeating a similar trend in H2 2022..· US Group II export light-grade prices revert to premium to FOB Asia prices in H2 May 2024 and for first time since beginning of Feb 2024.· US Group II domestic light-grade premium to FOB Asia price edges up, stays much lower than US heavy-grade premium to FOB Asia cargo prices..· Price trends and less feasible arbitrage to clear surplus Group II light grades from Asia raise prospect of build-up of surplus volumes in the region unless output or prices fall.· A lack of any additional arbitrage shipments of light grades from Asia to the Americas would leave that region more reliant on supplies from the US, whose Group II light-grade availability tightened in Q2 2024..Global base oils margins outlook: Week of 3 June.Asia base oils demand outlook: Week of 3 June.Asia base oils supply outlook: Week of 3 June
