· Firm FOB Asia Group I base oils prices reflect tighter Group I supply in the region so far this year, especially for heavy grades.· Tighter fundamentals support unusually high premium of China’s domestic Group I brightstock prices over FOB Asia prices.· Tighter fundamentals fail to trigger similar price response in India even with sharp slowdown in its Group I imports from Thailand this year.· China remains reliant on Asia for additional brightstock requirements.· India is avoiding such a reliance amid a surge in base oils imports from Russia this year that more than compensate for slowdown in supplies from other sources.· Trend suggests a key beneficiary of Asia’s tighter structural supply of Group I base oils is Russia. .· India’s imported Group I SN 500 cargo price premium to FOB Asia prices holds in narrow, low range so far this year, and much lower than during 2023..· Premium stays lower despite drop in availability of Group I supplies from Thailand..· India’s CFR Group I SN 500 premium to FOB Europe export prices rises in Q1 2024 to widest level in more than four years..· Complicated logistics and Europe's more limited surplus supply dampen the attraction of lining up arbitrage shipments from Europe to India even with wider premium.· Shipments of other base oils grades from Europe to India in recent months move to the country via southern Africa rather than via Suez Canal to avoid Red Sea region..· India’s imports from Russia avoid these difficulties. · India’s imports from Russia enjoy the additional benefit of more competitive prices.· India’s imports from Russia rise to almost 30,000 tonnes in Q1 2024, with supplies consisting mostly of Group I heavy grades.· Import volume rises from less than 1,000 tonnes in 2022 and 2023 combined..· India’s import volume in Q1 2024 is equivalent to more than half of Europe’s average quarterly import volume from Russia in 2020 and 2021..· India’s imports from Russia could also start to impact demand for Group II heavy neutrals.· India’s imported Group II N500 cargo price premium to Group I SN 500 prices widens in recent weeks to highest since Q3 2022..· Rising N500 premium mirrors similar trend to FOB NE Asia cargo prices partly because tighter availability of Group I SN 500 leaves blenders requiring more Group II heavy neutrals instead.· Signs of plentiful availability of Group I heavy grades of Russian origin at competitive prices conversely makes less pressing the need for Indian blenders to use more Group II heavy neutrals..Global base oils margins outlook: Week of 6 May.Asia base oils demand outlook: Week of 6 May.Asia base oils supply outlook: Week of 6 May
· Firm FOB Asia Group I base oils prices reflect tighter Group I supply in the region so far this year, especially for heavy grades.· Tighter fundamentals support unusually high premium of China’s domestic Group I brightstock prices over FOB Asia prices.· Tighter fundamentals fail to trigger similar price response in India even with sharp slowdown in its Group I imports from Thailand this year.· China remains reliant on Asia for additional brightstock requirements.· India is avoiding such a reliance amid a surge in base oils imports from Russia this year that more than compensate for slowdown in supplies from other sources.· Trend suggests a key beneficiary of Asia’s tighter structural supply of Group I base oils is Russia. .· India’s imported Group I SN 500 cargo price premium to FOB Asia prices holds in narrow, low range so far this year, and much lower than during 2023..· Premium stays lower despite drop in availability of Group I supplies from Thailand..· India’s CFR Group I SN 500 premium to FOB Europe export prices rises in Q1 2024 to widest level in more than four years..· Complicated logistics and Europe's more limited surplus supply dampen the attraction of lining up arbitrage shipments from Europe to India even with wider premium.· Shipments of other base oils grades from Europe to India in recent months move to the country via southern Africa rather than via Suez Canal to avoid Red Sea region..· India’s imports from Russia avoid these difficulties. · India’s imports from Russia enjoy the additional benefit of more competitive prices.· India’s imports from Russia rise to almost 30,000 tonnes in Q1 2024, with supplies consisting mostly of Group I heavy grades.· Import volume rises from less than 1,000 tonnes in 2022 and 2023 combined..· India’s import volume in Q1 2024 is equivalent to more than half of Europe’s average quarterly import volume from Russia in 2020 and 2021..· India’s imports from Russia could also start to impact demand for Group II heavy neutrals.· India’s imported Group II N500 cargo price premium to Group I SN 500 prices widens in recent weeks to highest since Q3 2022..· Rising N500 premium mirrors similar trend to FOB NE Asia cargo prices partly because tighter availability of Group I SN 500 leaves blenders requiring more Group II heavy neutrals instead.· Signs of plentiful availability of Group I heavy grades of Russian origin at competitive prices conversely makes less pressing the need for Indian blenders to use more Group II heavy neutrals..Global base oils margins outlook: Week of 6 May.Asia base oils demand outlook: Week of 6 May.Asia base oils supply outlook: Week of 6 May