· Global base oils prices mostly extend rise from already-high levels relative to feedstock/competing fuel prices.· Increasingly firm margins insinuate strong demand and tight supply, incentivize refiners to raise output.· Strong demand would help to absorb higher supplies.· Weak demand would struggle to absorb higher supplies.· FOB Asia Group I/II base oils price premium to Singapore gasoil prices edges down slightly, stays unusually high.· FOB Asia Group I brightstock price premium to gasoil stays close to highest in more than two years but drops more than SN 150 and SN 500 premium..· In 2023, FOB Asia brightstock premium to gasoil rose from January to mid-May 2023, before slumping..· China’s domestic Group II N150 premium to Shandong diesel prices slips to lowest in more than a month, stays in narrow range since end-2023..· Premium falls even with planned shutdown of several domestic Group II base oils plants in May-June 2024..· CFR India N70 premium to Singapore gasoil prices hold close to highest since Nov 2023..· High premium sustains incentive for Asia’s refiners to maintain firm base oils output and sell very light grades into regional market rather than redirect the supplies back into diesel pool..· Europe’s domestic brightstock price premium to VGO rises to highest since H1 Jan 2024..· Premium rises faster than Group I light/heavy neutrals and faster than export price premium to VGO.· Firmer premium typically incentivizes refiners to boost output of the product.· Tighter regional base oils production capacity could curb such moves..· US Group II export price premium to VGO extends sharp rise to highest since H2 Nov 2023..· Rising export premium adds to incentive for refiners to boost output despite closed arbitrage to growing number of overseas markets.· US Group III 4cSt premium to VGO holds steady at low levels, after much smaller recovery than Group II price premium to VGO since mid-April 2024..Asia base oils demand outlook: Week of 3 June.Asia base oils supply outlook: Week of 3 June
· Global base oils prices mostly extend rise from already-high levels relative to feedstock/competing fuel prices.· Increasingly firm margins insinuate strong demand and tight supply, incentivize refiners to raise output.· Strong demand would help to absorb higher supplies.· Weak demand would struggle to absorb higher supplies.· FOB Asia Group I/II base oils price premium to Singapore gasoil prices edges down slightly, stays unusually high.· FOB Asia Group I brightstock price premium to gasoil stays close to highest in more than two years but drops more than SN 150 and SN 500 premium..· In 2023, FOB Asia brightstock premium to gasoil rose from January to mid-May 2023, before slumping..· China’s domestic Group II N150 premium to Shandong diesel prices slips to lowest in more than a month, stays in narrow range since end-2023..· Premium falls even with planned shutdown of several domestic Group II base oils plants in May-June 2024..· CFR India N70 premium to Singapore gasoil prices hold close to highest since Nov 2023..· High premium sustains incentive for Asia’s refiners to maintain firm base oils output and sell very light grades into regional market rather than redirect the supplies back into diesel pool..· Europe’s domestic brightstock price premium to VGO rises to highest since H1 Jan 2024..· Premium rises faster than Group I light/heavy neutrals and faster than export price premium to VGO.· Firmer premium typically incentivizes refiners to boost output of the product.· Tighter regional base oils production capacity could curb such moves..· US Group II export price premium to VGO extends sharp rise to highest since H2 Nov 2023..· Rising export premium adds to incentive for refiners to boost output despite closed arbitrage to growing number of overseas markets.· US Group III 4cSt premium to VGO holds steady at low levels, after much smaller recovery than Group II price premium to VGO since mid-April 2024..Asia base oils demand outlook: Week of 3 June.Asia base oils supply outlook: Week of 3 June