· Weak diesel values and firm base oils premium to diesel incentivize refiners to boost base oils output.· Asia-Pacific base oils supply likely to dip in Q2 2023 amid plant maintenance work in northeast and southeast Asia.· Slowdown in demand likely to limit impact of drop in supply.· Asia-Pacific supply shows signs of rising in March – firm regional prices suggest demand was sufficient to absorb the supplies.· Even firmer regional prices in Q2 2023 could face more pressure if weaker demand outweighs lower supply during round of plant maintenance work.· Completion of plant maintenance in China in coming weeks likely to boost supply in that market.· Firm domestic Chinese base oils prices versus crude and diesel add to attraction of increasing output.· China’s paraffinic base oils output rises in April to 13-month high even with ongoing plant maintenance work..· China’s base oils output remains far below 2021 and Q1 2022 levels – leaving large volume of latent capacity.· Further rise in China’s base oils output, combined with steady rather than surging demand growth, likely to curb requirements for overseas supplies and increase prospect of higher Chinese exports.· Japan’s March base oils output rises to eight-month high as refiners/buyers boost stocks ahead of plant maintenance work starting in April.· Japan’s base oils output likely to be lower through Q2 2023.· Thailand’s base oils refiners likely entered Q2 2023 with lower stocks, curbing any immediate need to compromise on price levels.· Indonesia’s base oils supplies/exports likely to revive in Q2 after plant maintenance work cut supply in Q1 2023.· Sharp slowdown in Singapore’s base oils exports from domestic sources in the two weeks to 3 May point to factors such as plant maintenance.· Drop in Singapore’s base oils exports since late April likely to counter impact of slower regional demand.· Drop in Singapore’s base oils exports to India in recent weeks partially counters likely surge in supplies from US to that market over coming weeks..Asia base oils - week of May 8: Demand outlook
· Weak diesel values and firm base oils premium to diesel incentivize refiners to boost base oils output.· Asia-Pacific base oils supply likely to dip in Q2 2023 amid plant maintenance work in northeast and southeast Asia.· Slowdown in demand likely to limit impact of drop in supply.· Asia-Pacific supply shows signs of rising in March – firm regional prices suggest demand was sufficient to absorb the supplies.· Even firmer regional prices in Q2 2023 could face more pressure if weaker demand outweighs lower supply during round of plant maintenance work.· Completion of plant maintenance in China in coming weeks likely to boost supply in that market.· Firm domestic Chinese base oils prices versus crude and diesel add to attraction of increasing output.· China’s paraffinic base oils output rises in April to 13-month high even with ongoing plant maintenance work..· China’s base oils output remains far below 2021 and Q1 2022 levels – leaving large volume of latent capacity.· Further rise in China’s base oils output, combined with steady rather than surging demand growth, likely to curb requirements for overseas supplies and increase prospect of higher Chinese exports.· Japan’s March base oils output rises to eight-month high as refiners/buyers boost stocks ahead of plant maintenance work starting in April.· Japan’s base oils output likely to be lower through Q2 2023.· Thailand’s base oils refiners likely entered Q2 2023 with lower stocks, curbing any immediate need to compromise on price levels.· Indonesia’s base oils supplies/exports likely to revive in Q2 after plant maintenance work cut supply in Q1 2023.· Sharp slowdown in Singapore’s base oils exports from domestic sources in the two weeks to 3 May point to factors such as plant maintenance.· Drop in Singapore’s base oils exports since late April likely to counter impact of slower regional demand.· Drop in Singapore’s base oils exports to India in recent weeks partially counters likely surge in supplies from US to that market over coming weeks..Asia base oils - week of May 8: Demand outlook