· Asia’s base oils prices hold firm vs feedstock/competing fuel prices.· Firm margins sustain incentive for refiners to maintain output at a time when regional demand is likely to ease.· Arbitrage stays hard to work from Asia to Americas and Europe, limiting outlets to more regular markets like India and Mideast Gulf.· Conversely, prospect of slowdown in arbitrage shipments from the US to Asia would curb the pace of a supply-build in the region.· South Korea’s base oils exports show signs of rising in March 2024, especially to markets like India and Mideast Gulf.· South Korea’s base oils exports could be lower in April 2024 because of scheduled plant maintenance work.· Exports from Indonesia show signs of rising in March 2024 and April 2024.· A rise in shipments from Indonesia would coincide with and help to cover for plant maintenance work in South Korea during that time.· Signs of more regular exports from Saudi Arabia to India via the Red Sea add to supplies in that market. .· Singapore’s base oils exports rebound last week, extending period of more volatile weekly flows than usual since start of 2024.· Singapore’s weekly base oils exports to China rebound last week to highest in almost a month.· Singapore’s exports to China over last four weeks stay lower than usual, contrast with firm flows to southeast Asia and especially to India..· Lower exports to China and firmer flows to southeast Asia and India mirror similar trend for Taiwan’s exports.· Trend suggests Asia’s refiners increasingly already assume that China’s demand will remain more muted, so target other markets instead..· Taiwan’s base oils exports show signs of holding firm so far in April 2024.· Recovery in Taiwan’s March base oils exports helps to cover seasonal pick-up in demand in southeast Asia and India at end-Q1 2024.· Pick-up in shipments to those outlets highlights Taiwan’s reduced reliance on China market, where rising domestic supply and cautious demand curb requirements from other sources..· Southeast Asia and India markets may have more difficulty absorbing Taiwan’s shipments in April 2024, when demand typically faces a seasonal slowdown..· Indonesia’s Group I base oils exports rise to thirteen-month high in Feb 2024..· Exports include a cargo from port of Cilacap for first time in thirteen months.· Rise in exports could reflect moves to tap firm Group I prices and tight Group I supply in Asia-Pacific market.· Moves suggest Indonesia could be able to boost Group I export volumes with appropriate price incentive..· Asia’s February base oils supply falls to lowest since mid-2021, cutting exports and availability ahead of typical seasonal rise in demand in the month of March..· Signs of pick-up in Asia’s base oils supply in March 2024 would help to replenish blenders’ depleted stocks.· Those inventories are likely to last longer in Q2 2024, when demand typically slows after surge in March.· Any continuation of firmer base oils supply in April 2024, combined with more muted demand, raises prospect of build-up of surplus volumes..· India set to see pick-up in arrival of arbitrage shipments from US in April 2024 following slowdown in such shipments in March 2024.· India’s imports from South Korea show signs of rising in April 2024, slipping in May 2024.· India continues to take delivery of more Group I base oils of Russian origin in April 2024.· Shipments follow delivery of more than 8,000 tonnes of Group I heavy grades of Russian origin in March 2024.· CFR India Group I SN 500 premium to FOB Asia prices stays lower than throughout 2023.· Trend suggests Group I heavy-neutrals supplies from sources like Russia cover more requirements, curbing need to keep open the arbitrage from Asia.· India’s shipments from Russia in March and April 2024 also include steady flow of Group III 6cSt base oils.· India takes delivery of large cargo of Group II base oils from Taiwan in H1 April 2024; more than half the shipment consists of heavy grades..Asia base oils demand outlook: Week of 15 April
