· Asia’s base oils prices extend rise vs feedstock/competing fuel prices.· Strong and sustained incentive to maximise base oils output contrasts with signs of limited build-up of surplus supplies so far.· Even so, high prices relative to feedstock prices likely to curb demand, improving supply balance.· Arbitrage from Asia to Americas could get more challenging, with Asia Group II price discount to US prices narrowing in Sept 2024 for first time since May 2024.· South Korea’s base oils exports show signs of slipping in H1 Sept 2024 vs month-earlier levels.· Its exports are likely to fall over coming weeks because of scheduled plant maintenance work.· Taiwan’s base oils exports slow sharply in H1 Sept 2024 compared with previous two months, raise prospect of dip in shipments this month.· Any such slowdown would coincide with likely drop in shipments from South Korea..· Slowdown would follow jump in Taiwan’s Group II base oils exports to China to seven-month high in Aug 2024..· Rise in shipments coincides with drop in China’s Group II base oils output since June 2024.· Rise in shipments could reflect moves by China’s refiners to boost Group III output in place of Group II base oils, and to cover any Group II shortfall with imports..· Taiwan’s base oils exports to southeast Asia in Aug 2024 hold at second-highest level in at least nine years..· Signs of sustained rise in shipments to markets like Indonesia add to competition for market share in southeast Asia market.· Southeast Asia is already a key market for supplies from Singapore and South Korea as demand for overseas supplies wanes in China and faces prospect of similar trend in India..· Singapore’s base oils exports rise over past week to highest weekly volume in almost a month.· Rise in exports follows sustained dip in shipments that cut four-week shipments to lowest in more than two months..· Any extension of weekly rise in exports would suggest the reason for the dip in shipments is over.· Singapore’s base oils imports over past four weeks rise to highest level since May 2023..· Imports get boost over past week from delivery of another large shipment from US, and cargo from Netherlands.· Singapore continues to take delivery of shipments from those markets despite closed arbitrage from US and Europe.· Shipments likely consist mostly of Group II base oils, adding to regional supply..· Asia’s base oils surplus of supply over demand rises to six-month high in July 2024..· Asia’s relatively firm base oils prices in Q3 2024 suggest lower-than-usual surplus throughout most of H1 2024 curbed impact of higher surplus in July 2024.· Surge in Asia’s base oils exports to southeast Asia in July 2024 points either to firm demand or to transfer of surplus volumes to that region..· Base oils supply falls more sharply in Asia than in Americas, Europe and Middle East in H1 2024..· Lower supply contrasts with firm demand in Asia, especially compared with US and Europe.· Lower supply and firmer demand could leave Asia’s supply surplus tighter than in other regions at least at start of H2 2024..Asia base oils demand outlook: Week of 16 Sept.Taiwan’s Aug base oils exports stay high
· Asia’s base oils prices extend rise vs feedstock/competing fuel prices.· Strong and sustained incentive to maximise base oils output contrasts with signs of limited build-up of surplus supplies so far.· Even so, high prices relative to feedstock prices likely to curb demand, improving supply balance.· Arbitrage from Asia to Americas could get more challenging, with Asia Group II price discount to US prices narrowing in Sept 2024 for first time since May 2024.· South Korea’s base oils exports show signs of slipping in H1 Sept 2024 vs month-earlier levels.· Its exports are likely to fall over coming weeks because of scheduled plant maintenance work.· Taiwan’s base oils exports slow sharply in H1 Sept 2024 compared with previous two months, raise prospect of dip in shipments this month.· Any such slowdown would coincide with likely drop in shipments from South Korea..· Slowdown would follow jump in Taiwan’s Group II base oils exports to China to seven-month high in Aug 2024..· Rise in shipments coincides with drop in China’s Group II base oils output since June 2024.· Rise in shipments could reflect moves by China’s refiners to boost Group III output in place of Group II base oils, and to cover any Group II shortfall with imports..· Taiwan’s base oils exports to southeast Asia in Aug 2024 hold at second-highest level in at least nine years..· Signs of sustained rise in shipments to markets like Indonesia add to competition for market share in southeast Asia market.· Southeast Asia is already a key market for supplies from Singapore and South Korea as demand for overseas supplies wanes in China and faces prospect of similar trend in India..· Singapore’s base oils exports rise over past week to highest weekly volume in almost a month.· Rise in exports follows sustained dip in shipments that cut four-week shipments to lowest in more than two months..· Any extension of weekly rise in exports would suggest the reason for the dip in shipments is over.· Singapore’s base oils imports over past four weeks rise to highest level since May 2023..· Imports get boost over past week from delivery of another large shipment from US, and cargo from Netherlands.· Singapore continues to take delivery of shipments from those markets despite closed arbitrage from US and Europe.· Shipments likely consist mostly of Group II base oils, adding to regional supply..· Asia’s base oils surplus of supply over demand rises to six-month high in July 2024..· Asia’s relatively firm base oils prices in Q3 2024 suggest lower-than-usual surplus throughout most of H1 2024 curbed impact of higher surplus in July 2024.· Surge in Asia’s base oils exports to southeast Asia in July 2024 points either to firm demand or to transfer of surplus volumes to that region..· Base oils supply falls more sharply in Asia than in Americas, Europe and Middle East in H1 2024..· Lower supply contrasts with firm demand in Asia, especially compared with US and Europe.· Lower supply and firmer demand could leave Asia’s supply surplus tighter than in other regions at least at start of H2 2024..Asia base oils demand outlook: Week of 16 Sept.Taiwan’s Aug base oils exports stay high
