Asia base oils supply outlook: Week of 6 May

·        Asia and domestic China base oils premium to feedstock/diesel prices rises strongly.

·        High base oils premium incentivizes refiners to raise output at a time when buying interest is already more muted.

·        Any further slowdown in demand could trigger a faster build-up of surplus supplies.

·        Lower output and/or lower prices would boost likelihood of more balanced supplies.

·        FOB NE Asia Group II light-grade price discount to India and China prices continues to narrow.

·        Less feasible arbitrage to Asia’s two largest markets boosts need for refiners to trim output or to move more supplies to other markets.

·        Arbitrage to move surplus supplies to outlets like Europe and Americas stays hard to work.

·        South Korea’s base oils exports could rise in May 2024 following signs of slowdown in shipments in April 2024.

·        Exports show signs of slowing in April 2024 after South Korea’s March base oils output falls to eight-month low.

·        Output in April 2024 likely stayed lower than usual because of plant maintenance work.

·        Output likely to recover to more typical levels in May 2024 following completion of plant maintenance work.

·        Singapore’s base oils exports show signs of staying lower than usual in April for a third month amid slowdown in flows during last two weeks of the month and dip in shipments to southeast Asia.

·        Singapore’s base oils exports to India in four weeks to 1 May extend rise to unusually high levels above 40,000 tonnes.

·        Volume rises from average exports of around 26,000 tonnes/month to India in year to March 2024.

·        Singapore’s imports show signs of falling in April 2024 from previous month on slowdown in shipments from Qatar, Hong Kong, South Korea, China and US.

·        China’s base oils supply shows signs of falling in April 2024 amid plant maintenance work, cautious demand.

·        Japan’s March base oils output falls for twelfth month from year-earlier levels.

·        Sustained fall in Japan’s supply is key factor underlying Asia’s increasingly tight availability of Group I base oils.

·        Japan’s March base oils output rises from February to three-month high.

·        Higher month-on-month output could reflect response to tight supply and increasingly firm Group I base oils prices in Asia.

·        Japan’s March base oils output as share of country’s total refined products output rises to 1.45% from 1.38% in February.

·        Output share remains low compared with typical levels even with no scheduled plant maintenance work.

·        Lower share of output reflects Japan refiners’ lower base oils production capacity and more limited room to raise production in response to firm prices or tight supply fundamentals.  

·        Thailand’s March base oils exports fall to seven-year low, customs data shows.

·        Exports fall even after completion of domestic plant maintenance work in Feb 2024.

·        Lower shipments compound tight supply of Group I base oils in Asia, extend tightness into Q2 2024.