· Asia’s base oils prices extend slide vs feedstock/competing fuel prices.· Any extension of trend would incentivize refiners to consider adjusting production plans.· Any such moves would keep Asia’s supply surplus lower for longer.· Arbitrage to move shipments from US to Asia improves but stays hard to work.· Still-limited arbitrage opportunities contrast with expectations that arb would be more feasible in Q4 2024.· Less feasible arbitrage opportunities add to signs of more limited surplus supply in Asia-Pacific region.· More limited surplus supply gives refiners more leverage to target prices that maintain margins at recent levels..· Singapore’s base oils exports over past four weeks show signs of steadying at more typical levels after unusually volatile flows in July-Aug 2024..· Singapore takes delivery of larger-than-usual shipment from Saudi Arabia in past week..· Shipment adds to pick-up in flows from Saudi Arabia to Singapore in H2 2024.· Taiwan’s base oils exports show signs of recovering to more typical levels so far in Oct 2024, after surge in shipments in July-Aug 2024 followed by dip in exports in Sept 2024..· Plant maintenance in South Korea and Japan and lower exports from Taiwan in Sept 2024 raise prospect of cutting regional supply to multi-month low.· Any significant recovery in output unlikely before Nov 2024.· South Korea’s base oils output holds firm and in narrow range in Aug 2024, contrasts with surge in exports that month.· South Korea’s net supply duly flips to deficit in Aug 2024 for first time in three months, and to largest deficit in five months..· South Korea’s tighter supply raises prospect of curbing its ability to maintain steady exports during plant maintenance work in Sept-Oct 2024.· Dynamic puts onus on buyers to tap stocks or line up other sources to cover requirements..· Thailand’s Group I base oils output holds in Aug 2024 at second-highest level in nineteen months..· Surplus of output vs domestic and overseas demand still falls in Aug 2024 to lowest level in at least six months.· Trend highlights growing demand for Thailand’s base oils and pressure on output staying higher to cover that demand.· Growing importance of Thailand’s Group I base oils highlights slump in Asia’s Group I base oils production capacity in recent years.· Recent dip in Asia’s Group I base oils margins, especially for light grades, could incentivize Thailand’s refiners to trim base oils output..S Korea Aug base oil output edges down.Thailand's August base oils output stays higher.Asia base oils demand outlook: Week of 14 Oct
