· Asia’s base oils supply likely to stay lower than usual in face of regional plant maintenance-work.· Firmer base oils margins curb incentive to cut run-rates, but margins remain lower than usual. · China’s Shandong diesel price premium to crude oil falls back, stays close to lower end of range over past year.· China’s more muted diesel values and firmer domestic base oils prices versus diesel could incentivize refiners to bring more capacity back online.· Domestic refiners likely to hold off such moves for now to assess sustainability of recovery in base oils values..· China’s September base oils output stays unusually low as Group II output falls.· Domestic Group II output falls even ahead of seasonal pick-up in demand from end-Q3 2023..· Lower output suggests refiners responded to weak margins by delaying moves to raise production.· Trend leaves unusually large volume of latent production capacity offline for extended period..· Asia’s August base oils supply rebounds to five-month high as rise in South Korea’s output outweighs slowdown in other markets like Japan and India..· Rebound in supply coincides with seasonal slowdown in demand, raising prospect of more rapid rise in surplus volumes.· More limited supply surplus at start of Q3 2023 likely to curb any immediate impact of higher production.· Prospect of slump in base oils supply from Taiwan throughout most of Q4 2023 also set to curb any supply-build.· Lack of any significant supply-surplus in Q4 2023 would contrast with same time last year and curb flow of arbitrage shipments to markets like Africa and Latin America..· South Korea remains Pakistan’s largest supplier in August even as shipment volumes fall.· Trend marks sustained surge in South Korea’s share of Pakistan’s base oils market and drop in Singapore’s share in recent years..· Trend leaves South Korean refiners well placed to tap any sustained recovery in Pakistan’s lube and base oils demand..Global base oils - week of Oct 16: Price signals - arbitrage
· Asia’s base oils supply likely to stay lower than usual in face of regional plant maintenance-work.· Firmer base oils margins curb incentive to cut run-rates, but margins remain lower than usual. · China’s Shandong diesel price premium to crude oil falls back, stays close to lower end of range over past year.· China’s more muted diesel values and firmer domestic base oils prices versus diesel could incentivize refiners to bring more capacity back online.· Domestic refiners likely to hold off such moves for now to assess sustainability of recovery in base oils values..· China’s September base oils output stays unusually low as Group II output falls.· Domestic Group II output falls even ahead of seasonal pick-up in demand from end-Q3 2023..· Lower output suggests refiners responded to weak margins by delaying moves to raise production.· Trend leaves unusually large volume of latent production capacity offline for extended period..· Asia’s August base oils supply rebounds to five-month high as rise in South Korea’s output outweighs slowdown in other markets like Japan and India..· Rebound in supply coincides with seasonal slowdown in demand, raising prospect of more rapid rise in surplus volumes.· More limited supply surplus at start of Q3 2023 likely to curb any immediate impact of higher production.· Prospect of slump in base oils supply from Taiwan throughout most of Q4 2023 also set to curb any supply-build.· Lack of any significant supply-surplus in Q4 2023 would contrast with same time last year and curb flow of arbitrage shipments to markets like Africa and Latin America..· South Korea remains Pakistan’s largest supplier in August even as shipment volumes fall.· Trend marks sustained surge in South Korea’s share of Pakistan’s base oils market and drop in Singapore’s share in recent years..· Trend leaves South Korean refiners well placed to tap any sustained recovery in Pakistan’s lube and base oils demand..Global base oils - week of Oct 16: Price signals - arbitrage
