· Asia’s base oils supply likely to hold steady ahead of seasonal rise in demand.· Asia’s Group I base oils supply likely to improve in coming weeks following expected completion of plant maintenance in Thailand.· China's Group I base oils supply likely to tighten during scheduled plant maintenance work in March 2024. · Wide premium of Singapore Group I prices over Europe prices sustains incentive to work arbitrage to move Europe/Russian cargoes to markets like India and southeast Asia.· Possible closure of Group I plant in Europe in coming months could complicate region’s ability to move more shipments to Asia.· Possibility of lower volumes from Europe could magnify Group I supply tightness in Asia following plant-closure in Japan in Q4 2023.· Asia’s Group II base oils supply faces pressure from weaker margins, support from resumption of flows from Taiwan.· Asia’s Group II supply could get boost from less competitive arbitrage to more distant markets, keeping more shipments within the region.· More supplies from US could also move to India/Asia-Pacific region amid competitive prices and ongoing surplus.· Asia’s Group III supply likely to be tighter because of ongoing/upcoming plant maintenance work, sustained dip in shipments from Indonesia..· South Korea’s January base oils exports stay high even after country’s base oils output fell in Dec 2023..· Firm exports, lower output and ongoing refinery run-cuts point to drop in country’s surplus supply..· Taiwan’s January base oils exports rebound to ten-month high following completion of maintenance work in Dec 2023.· Taiwan’s February exports set to fall from previous month as production issues cut output from late-Jan 2024.· Drop in shipments could have more impact on markets like UAE than on China, where demand slowed during lunar new year holidays..· Any slowdown in shipments to UAE would follow drop in South Korea’s exports to the country in recent months..· Asia’s December base oils exports stay relatively low even as they rise from Nov 2023..· Lower-than-usual exports in Dec 2023 and throughout 2H 2023 point to more balanced supply during that period and more limited surplus carried over into 2024.· Asia’s firmer base oils prices vs crude/gasoil compared with other regions in early 2024 reflect its more limited surplus supply at start of year..· Indonesia’s December base oils exports fall on slump in Group III base oils shipments to five-month low..· Fall in shipments includes unusual pause in flows to Europe.· Trend suggests global refiners continue to focus on moving more Group III supplies to US rather than to Europe.· Trend raises prospect of keeping Europe’s Group III supply lower than usual, especially for supplies from Asia..· India’s January base oils imports stay higher for third month even as domestic lube demand eases.· Trend raises prospect of further rise in India’s surplus supplies.· Drop in January imports from Dec 2023 mostly reflects fall in shipments of very-light grade base oils.· India takes delivery of large cargo of Russian origin, mostly of Group I heavy neutrals, in 2H Jan 2024.· Shipment from Russia is first cargo-sized volume from the country in more than two years and largest in more than seven years..· Surge in Group I supplies from Russia coincides with plant maintenance in southeast Asia, helps to ease Asia’s tight availability of Group I base oils.· Any repetition of Group I base oils shipments from Russia could curb India’s demand for supplies from southeast Asia and China.· Any repetition of Group I shipments from Russia would need to be at even lower prices following slump in Europe export base oil prices in early-Jan 2024..· South Korea’s January base oils exports to Nigeria rise to record-high..· Shipments to West Africa markets like Nigeria could provide South Korean refiners with alternative outlet if India’s demand falls in response to rising domestic production capacity..Asia base oils - week of Feb 19: Demand outlook.Global base oils - week of Feb 19: Price outlook - margins.Global base oils - week of Feb 19: Price outlook - arbitrage
· Asia’s base oils supply likely to hold steady ahead of seasonal rise in demand.· Asia’s Group I base oils supply likely to improve in coming weeks following expected completion of plant maintenance in Thailand.· China's Group I base oils supply likely to tighten during scheduled plant maintenance work in March 2024. · Wide premium of Singapore Group I prices over Europe prices sustains incentive to work arbitrage to move Europe/Russian cargoes to markets like India and southeast Asia.· Possible closure of Group I plant in Europe in coming months could complicate region’s ability to move more shipments to Asia.· Possibility of lower volumes from Europe could magnify Group I supply tightness in Asia following plant-closure in Japan in Q4 2023.· Asia’s Group II base oils supply faces pressure from weaker margins, support from resumption of flows from Taiwan.· Asia’s Group II supply could get boost from less competitive arbitrage to more distant markets, keeping more shipments within the region.· More supplies from US could also move to India/Asia-Pacific region amid competitive prices and ongoing surplus.· Asia’s Group III supply likely to be tighter because of ongoing/upcoming plant maintenance work, sustained dip in shipments from Indonesia..· South Korea’s January base oils exports stay high even after country’s base oils output fell in Dec 2023..· Firm exports, lower output and ongoing refinery run-cuts point to drop in country’s surplus supply..· Taiwan’s January base oils exports rebound to ten-month high following completion of maintenance work in Dec 2023.· Taiwan’s February exports set to fall from previous month as production issues cut output from late-Jan 2024.· Drop in shipments could have more impact on markets like UAE than on China, where demand slowed during lunar new year holidays..· Any slowdown in shipments to UAE would follow drop in South Korea’s exports to the country in recent months..· Asia’s December base oils exports stay relatively low even as they rise from Nov 2023..· Lower-than-usual exports in Dec 2023 and throughout 2H 2023 point to more balanced supply during that period and more limited surplus carried over into 2024.· Asia’s firmer base oils prices vs crude/gasoil compared with other regions in early 2024 reflect its more limited surplus supply at start of year..· Indonesia’s December base oils exports fall on slump in Group III base oils shipments to five-month low..· Fall in shipments includes unusual pause in flows to Europe.· Trend suggests global refiners continue to focus on moving more Group III supplies to US rather than to Europe.· Trend raises prospect of keeping Europe’s Group III supply lower than usual, especially for supplies from Asia..· India’s January base oils imports stay higher for third month even as domestic lube demand eases.· Trend raises prospect of further rise in India’s surplus supplies.· Drop in January imports from Dec 2023 mostly reflects fall in shipments of very-light grade base oils.· India takes delivery of large cargo of Russian origin, mostly of Group I heavy neutrals, in 2H Jan 2024.· Shipment from Russia is first cargo-sized volume from the country in more than two years and largest in more than seven years..· Surge in Group I supplies from Russia coincides with plant maintenance in southeast Asia, helps to ease Asia’s tight availability of Group I base oils.· Any repetition of Group I base oils shipments from Russia could curb India’s demand for supplies from southeast Asia and China.· Any repetition of Group I shipments from Russia would need to be at even lower prices following slump in Europe export base oil prices in early-Jan 2024..· South Korea’s January base oils exports to Nigeria rise to record-high..· Shipments to West Africa markets like Nigeria could provide South Korean refiners with alternative outlet if India’s demand falls in response to rising domestic production capacity..Asia base oils - week of Feb 19: Demand outlook.Global base oils - week of Feb 19: Price outlook - margins.Global base oils - week of Feb 19: Price outlook - arbitrage