· Asia’s base oils supply shows signs of staying balanced through Q4 2023 amid plant maintenance, steady regional demand.· China’s Shandong diesel prices improve vs crude oil, stay low vs domestic base oils prices.· Trend incentivizes domestic refiners to raise output.· Asia’s firm prices compared with China’s domestic prices continue to incentivize China’s domestic refiners that can move shipments into the export market to do so.· Group II base oils shipments from Taiwan expected to resume in Dec 2023 following completion of plant maintenance work.· Its most recent plant maintenance work lasted longer than expected because of a production glitch during plant restart..· South Korea’s September base oils output edges down from Aug 2023 levels..· Small dip in output mirrors most other key producers in Asia-Pacific region, curbing supply-build in the region.· Combined together, Asia’s September base oils output falls more than 60,000t from Aug 2023..· Lower output contrasts with signs of strong revival in demand in several key markets in Asia-Pacific.· Trend points to relatively balanced supply-demand fundamentals heading into Q4 2023.· Trend contrasts with large overhang of surplus supplies in Q3 2022 and subsequent surge in arbitrage shipments to distant markets like Africa and Latin America..· Asia’s lower base oils supply mirrors slide in region’s base oils exports in Sept 2023.· Exports usually rise in month of September from August as refiners clear surplus supplies that build up during Q3..· Asia’s base oils exports fall by more than 270,000t in Q3 2023 from year-earlier levels.· Lower exports reflect balanced-to-tighter supply-demand dynamics in Q3 2023.· Lower exports cut supply for buyers in Asia and in more distant markets like Africa and Latin America.· Lower exports leave regional and global market with tighter supply in Q4 2023.· Tighter supply fundamentals in Asia raise prospect of supporting firmer base oils prices relative to feedstock/competing fuel prices and relative to other regions..· Thailand’s base oils supply lags demand in Sept 2023 for second month..· Thailand’s supply shortfall of more than 7,500kl in Q3 2023 contrasts with surplus of more than 43,000kl in Q3 2022.· Shortfall curbs Thailand’s need to clear surplus supplies in Q4 2023.· Supply shortfall comes just weeks ahead of closure of Group I plant in Japan.· Shortfall curbs Thailand’s ability to cover any additional demand in region in the short-term following closure of plant in Japan.· Asia Group I base oils prices remain relatively weak at end Q3/early Q4 2023 despite tighter Group I supply.· Price weakness deters suppliers like Thailand from raising output..· Indonesia’s Group III base oils exports fall in Q3 2023 from previous year for seventh straight quarter..· Sustained slowdown in Group III exports likely reflects combination of lower base oils output and rising domestic demand.· Exports in Q3 2023 still rise to highest in a year, pointing to rise in output compared with late last year and early this year.· Group III exports rise in Q3 2023, but with no shipments to China.· Dearth of shipments to China coincides with rise in China’s domestic Group III base oils output.· Trend leaves more Group III supplies targeting the other major markets of Europe and US..· Slowdown in very-light grade base oils shipments from Spain to India in Oct 2023 coincides with drop in arrival of arbitrage flows from US to India in recent months, including Oct 2023.· Drop in shipments from key sources follows fall in India’s imports of very-light-grade base oils in Sep 2023.· Trend increases India’s need to replenish stocks and its reliance on South Korea and Mideast Gulf especially.· Signs of pick-up in availability of very-light grade base oils from US would provide welcome additional source of supplies for Indian buyers.· Any such rise in supplies from US would likely have more impact in early-2024, rather than during remaining weeks of this year..· Singapore’s four-week base oils imports fall to lowest in more than three months.· Four-week imports from Japan fall to lowest since Jan 2022..· Slowdown in shipments from Japan likely to continue following closure of Group I plant in the country in Oct 2023.· Drop in supplies from Japan increases need for alternative supplies to cover shortfall.· Rise in shipments from Italy to Singapore show signs of continuing over coming weeks, covering some of the shortfall..Global base oils - week of Nov 13: Price outlook - arbitrage
· Asia’s base oils supply shows signs of staying balanced through Q4 2023 amid plant maintenance, steady regional demand.· China’s Shandong diesel prices improve vs crude oil, stay low vs domestic base oils prices.· Trend incentivizes domestic refiners to raise output.· Asia’s firm prices compared with China’s domestic prices continue to incentivize China’s domestic refiners that can move shipments into the export market to do so.· Group II base oils shipments from Taiwan expected to resume in Dec 2023 following completion of plant maintenance work.· Its most recent plant maintenance work lasted longer than expected because of a production glitch during plant restart..· South Korea’s September base oils output edges down from Aug 2023 levels..· Small dip in output mirrors most other key producers in Asia-Pacific region, curbing supply-build in the region.· Combined together, Asia’s September base oils output falls more than 60,000t from Aug 2023..· Lower output contrasts with signs of strong revival in demand in several key markets in Asia-Pacific.· Trend points to relatively balanced supply-demand fundamentals heading into Q4 2023.· Trend contrasts with large overhang of surplus supplies in Q3 2022 and subsequent surge in arbitrage shipments to distant markets like Africa and Latin America..· Asia’s lower base oils supply mirrors slide in region’s base oils exports in Sept 2023.· Exports usually rise in month of September from August as refiners clear surplus supplies that build up during Q3..· Asia’s base oils exports fall by more than 270,000t in Q3 2023 from year-earlier levels.· Lower exports reflect balanced-to-tighter supply-demand dynamics in Q3 2023.· Lower exports cut supply for buyers in Asia and in more distant markets like Africa and Latin America.· Lower exports leave regional and global market with tighter supply in Q4 2023.· Tighter supply fundamentals in Asia raise prospect of supporting firmer base oils prices relative to feedstock/competing fuel prices and relative to other regions..· Thailand’s base oils supply lags demand in Sept 2023 for second month..· Thailand’s supply shortfall of more than 7,500kl in Q3 2023 contrasts with surplus of more than 43,000kl in Q3 2022.· Shortfall curbs Thailand’s need to clear surplus supplies in Q4 2023.· Supply shortfall comes just weeks ahead of closure of Group I plant in Japan.· Shortfall curbs Thailand’s ability to cover any additional demand in region in the short-term following closure of plant in Japan.· Asia Group I base oils prices remain relatively weak at end Q3/early Q4 2023 despite tighter Group I supply.· Price weakness deters suppliers like Thailand from raising output..· Indonesia’s Group III base oils exports fall in Q3 2023 from previous year for seventh straight quarter..· Sustained slowdown in Group III exports likely reflects combination of lower base oils output and rising domestic demand.· Exports in Q3 2023 still rise to highest in a year, pointing to rise in output compared with late last year and early this year.· Group III exports rise in Q3 2023, but with no shipments to China.· Dearth of shipments to China coincides with rise in China’s domestic Group III base oils output.· Trend leaves more Group III supplies targeting the other major markets of Europe and US..· Slowdown in very-light grade base oils shipments from Spain to India in Oct 2023 coincides with drop in arrival of arbitrage flows from US to India in recent months, including Oct 2023.· Drop in shipments from key sources follows fall in India’s imports of very-light-grade base oils in Sep 2023.· Trend increases India’s need to replenish stocks and its reliance on South Korea and Mideast Gulf especially.· Signs of pick-up in availability of very-light grade base oils from US would provide welcome additional source of supplies for Indian buyers.· Any such rise in supplies from US would likely have more impact in early-2024, rather than during remaining weeks of this year..· Singapore’s four-week base oils imports fall to lowest in more than three months.· Four-week imports from Japan fall to lowest since Jan 2022..· Slowdown in shipments from Japan likely to continue following closure of Group I plant in the country in Oct 2023.· Drop in supplies from Japan increases need for alternative supplies to cover shortfall.· Rise in shipments from Italy to Singapore show signs of continuing over coming weeks, covering some of the shortfall..Global base oils - week of Nov 13: Price outlook - arbitrage