· Global base oils prices extend fall vs feedstock/competing fuel prices.· This month's rise in crude/diesel prices coincides with seasonally weak base oils supply-demand fundamentals in most markets.· Weak fundamentals complicate refiners’ ability to respond to rising costs and squeezed margins by adjusting prices higher.· Alternative is to adjust supply lower..· Asia’s base oils price premium to feedstock/gasoil prices extends slide.· FOB NE Asia Group II heavy-grade premium falls to lowest since Q3 2024; light-grade differential falls to lowest since Q3 2023..· FOB Asia Group I SN 150 price falls to widest discount to gasoil since Oct 2023.· Weakness of light-grade prices incentivizes refiners to cut run rates..· China’s domestic Group II N150 premium to Shandong diesel prices recovers after slumping the previous week.· Premium remains close to lowest since Q4 2023 even after partial recovery. .· Any extension of premium weakness would boost incentive for domestic refiners to focus on producing more diesel instead..· CFR India Group II N70 premium to Singapore gasoil prices extends slide to lowest since Q3 2023..· Sliding premium cuts attraction of moving very-light grades to India.· Sliding premium incentivizes refiners to focus on boosting diesel production instead.· Signs of base oils run-cuts point to some such moves already taking place..· Europe’s base oils prices extend fall vs VGO, with domestic SN 150 price premium falling to lowest since March 2024.· Europe’s Group III 4cSt (low) premium to VGO falls even more steeply to lowest since Q4 2020..· More rangebound Group I SN 150 premium contrasts with still-falling Group III 4cSt differential, pointing to still-diverging supply-demand fundamentals for the two grades..· US Group II domestic light-grade price premium to VGO falls less steeply than in other regions over past month..· US Group II domestic light-grade premium to VGO still falls well below year-earlier levels.· US Group II domestic heavy-grade premium to VGO falls even further below year-earlier levels..· Lower light/heavy-grade premium to VGO contrasts with firmer heating oil premium to crude.· Dynamic adds to incentive for refiners to adjust production accordingly..Asia base oils demand outlook: Week of 20 Jan.Asia base oils supply outlook: Week of 20 Jan.Base Oil News stories and analysis also available on ICIS platform
