· Asia’s base oils supply likely to be mixed, with rising volumes of Group II base oils and increasingly tight availability of Group I base oils.· Asia’s Group III base oils supply show signs of dipping even ahead of several regional plant shutdowns in Q1 2024.· Asia’s Group II supply set to get boost following scheduled restart of Taiwan’s Group II unit in Dec 2023 after shutdown for maintenance work.· Asia’s Group II supply likely to get further support from open arbitrage from US and less feasible arbitrage to move supplies to the Americas region.· Asia and domestic China Group II prices continue to weaken vs Group I prices, reflecting region-wide tightening of Group I supplies vs Group II.· China’s domestic Group II light-grade premium to diesel stays lower than year-earlier, at levels that curb strong incentive to raise output.· Asia’s Group I supply likely to tighten further ahead of/during planned shutdown of Group I plant in Thailand in Jan 2024.· Plant shutdown would curb Thailand’s ability to provide additional supplies following closure of Group I plant in Japan in Q4 2023.· Plant shutdown would complicate regional buyers’ ability to replenish stocks ahead of seasonal rise in demand later in Q1 2024..· Taiwan’s November base oils exports stay unusually low because of ongoing plant maintenance work that month.· Drop in shipments coincides with fall in South Korea’s exports in Nov 2023 to four-month low..· Fall in South Korea’s base oils exports coincides with signs of lower-than-usual exports from Singapore in Nov 2023, and prospect of slowdown in shipments from Japan.· Slowdown in shipments curbs prospect of a major supply-build in Asia in Q4 2023, ahead of seasonal pick-up in demand in Q1 2024.· Drop in supplies and firm regional prices support prospect of ongoing flow of arbitrage shipments from US to markets like India..· Singapore’s weekly base oils imports almost grind to a halt amid sustained pause in flows from Japan, dearth of additional arbitrage cargoes from Europe.· Slowdown cuts Singapore’s imports over past four weeks to lowest level at least since early 2022..· Slowdown highlights repercussion of closure of base oils plant in Japan in Oct 2023, leaving Group I supply much tighter in Asia-Pacific region.· Ongoing slowdown in Singapore’s imports from China over last four weeks points to more limited surplus availability in that market..· India’s Group II prices strengthen vs US prices, weaken vs fob Asia and domestic China prices.· Trend boosts feasibility of more arbitrage shipments from US to India.· India’s November base oils imports rise to twenty-month high..· Rise in shipments highlights impact of rebound in exports from South Korea from start of Q4 2023, and of resumption of arbitrage flows from US.· Both those factors are likely to continue at least into start of 2024.· Prospect of rise in India’s base oils imports would leave buyers with more plentiful supply options and healthy stocks.· Trend shows signs of far outpacing rise in India’s domestic lube consumption.· Trend likely to put downward pressure on prices as Indian buyers leverage the growing competition among overseas suppliers.· India’s imports of arbitrage shipments from the US mostly consist of Group II mid-viscosity grades in Nov 2023.· Additional arbitrage shipments from US over coming months could include more very-light grade base oils as US faces prospect of lining up new outlets for supplies that had previously moved to Mexico.· Any such trend could put additional pressure on India’s imported prices for very-light grade base oils..Asia base oils - week of Dec 18: Demand outlook.Global base oils - week of Dec 18 Price outlook - margins.Global base oils - week of Dec 18: Price outlook - arbitrage
· Asia’s base oils supply likely to be mixed, with rising volumes of Group II base oils and increasingly tight availability of Group I base oils.· Asia’s Group III base oils supply show signs of dipping even ahead of several regional plant shutdowns in Q1 2024.· Asia’s Group II supply set to get boost following scheduled restart of Taiwan’s Group II unit in Dec 2023 after shutdown for maintenance work.· Asia’s Group II supply likely to get further support from open arbitrage from US and less feasible arbitrage to move supplies to the Americas region.· Asia and domestic China Group II prices continue to weaken vs Group I prices, reflecting region-wide tightening of Group I supplies vs Group II.· China’s domestic Group II light-grade premium to diesel stays lower than year-earlier, at levels that curb strong incentive to raise output.· Asia’s Group I supply likely to tighten further ahead of/during planned shutdown of Group I plant in Thailand in Jan 2024.· Plant shutdown would curb Thailand’s ability to provide additional supplies following closure of Group I plant in Japan in Q4 2023.· Plant shutdown would complicate regional buyers’ ability to replenish stocks ahead of seasonal rise in demand later in Q1 2024..· Taiwan’s November base oils exports stay unusually low because of ongoing plant maintenance work that month.· Drop in shipments coincides with fall in South Korea’s exports in Nov 2023 to four-month low..· Fall in South Korea’s base oils exports coincides with signs of lower-than-usual exports from Singapore in Nov 2023, and prospect of slowdown in shipments from Japan.· Slowdown in shipments curbs prospect of a major supply-build in Asia in Q4 2023, ahead of seasonal pick-up in demand in Q1 2024.· Drop in supplies and firm regional prices support prospect of ongoing flow of arbitrage shipments from US to markets like India..· Singapore’s weekly base oils imports almost grind to a halt amid sustained pause in flows from Japan, dearth of additional arbitrage cargoes from Europe.· Slowdown cuts Singapore’s imports over past four weeks to lowest level at least since early 2022..· Slowdown highlights repercussion of closure of base oils plant in Japan in Oct 2023, leaving Group I supply much tighter in Asia-Pacific region.· Ongoing slowdown in Singapore’s imports from China over last four weeks points to more limited surplus availability in that market..· India’s Group II prices strengthen vs US prices, weaken vs fob Asia and domestic China prices.· Trend boosts feasibility of more arbitrage shipments from US to India.· India’s November base oils imports rise to twenty-month high..· Rise in shipments highlights impact of rebound in exports from South Korea from start of Q4 2023, and of resumption of arbitrage flows from US.· Both those factors are likely to continue at least into start of 2024.· Prospect of rise in India’s base oils imports would leave buyers with more plentiful supply options and healthy stocks.· Trend shows signs of far outpacing rise in India’s domestic lube consumption.· Trend likely to put downward pressure on prices as Indian buyers leverage the growing competition among overseas suppliers.· India’s imports of arbitrage shipments from the US mostly consist of Group II mid-viscosity grades in Nov 2023.· Additional arbitrage shipments from US over coming months could include more very-light grade base oils as US faces prospect of lining up new outlets for supplies that had previously moved to Mexico.· Any such trend could put additional pressure on India’s imported prices for very-light grade base oils..Asia base oils - week of Dec 18: Demand outlook.Global base oils - week of Dec 18 Price outlook - margins.Global base oils - week of Dec 18: Price outlook - arbitrage
