· Asia’s base oils prices extend fall vs feedstock/gasoil prices as crude prices hold firm.· Light-grade base oils values slide close to or to discounts to gasoil prices, suggesting refiners face difficulty adjusting prices higher in response to rising feedstock costs.· Weak margins and limited leverage to raise prices incentivize refiners to cut output.· Signs of refinery run-cuts suggest some refiners are already implementing such moves.· Lower output would cut further a supply-surplus that shows signs of being lower than usual for the time of year.· Any disruptions to feedstock supplies from Russia could prompt additional run-cuts in markets like India and China.· Refiners’ stock-building ahead of/during scheduled plant maintenance work in northeast and southeast Asia likely to trim surplus further.· Supply could still get support from an arbitrage that stays hard to work to move cargoes to more distant markets, leaving more shipments in Asia..· South Korea’s base oils exports fall back to unusually low levels in Dec 2024..· Slump in exports points to lower-than-usual stocks in South Korea at end-2024 and moves to replenish inventories ahead of plant maintenance in Q1 2025.· Slump in exports cushions impact of seasonal dip in regional demand at year-end.· Slump in exports leaves regional buyers with lower-than-usual stocks at start of 2025.· Lower export volumes could extend through Q1 2025, until completion of upcoming plant maintenance work.· Lower exports raise prospect of keeping availability of Group II heavy grades tighter than usual.· That trend shows signs of extending to other key suppliers..· Light-grade base oils account for more than 60% of Taiwan’s base oils exports in Dec 2024..· Share rises from around 50% of Taiwan’s total exports in Aug-Nov 2024.· Drop in Taiwan’s heavy-grade base oils exports in Dec 2024, and their lower share of Taiwan’s total exports, add to signs that light-grade base oils accounted for larger share of rise in Asia’s surplus supply at end-2024.· Any extension of dip in Taiwan’s heavy-grade exports into early 2025 raises prospect of prolonging that trend.· Taiwan’s base oils shipments could face challenge of needing to target other markets like Americas once new base oils production capacity starts up in India and southeast Asia in coming year.· Taiwan’s base oils exports faced similar challenge in recent years when China’s rising production capacity cut demand from that market.· Taiwan redirected more shipments to southeast Asia and India instead..· New production capacity could curb number of alternative outlets in Asia, complicating Taiwan’s ability to respond..· Taiwan’s base oils exports hold firm so far in Jan 2025.· Regular flow of shipments could point to moves to front-load cargoes ahead of lunar new year holidays at end-Jan 2025.· Shipments include cargo bound for Pakistan.· Cargo would be second large shipment to Pakistan since Oct 2024.· Most recent cargo from Taiwan to Pakistan before Oct 2024 was in 2019..· Singapore’s four-week base oils exports rebound to highest since end-July 2024 amid surge in shipments to China..· Any extended pick-up in shipments would help to cushion against prospect of lower-than-usual export volumes from South Korea in coming months. · Singapore takes delivery of cargo from UK in H1 Jan 2025, adding to swathe of supplies from Europe in recent months..· Rise in imports from Europe could further cushion impact of tighter availability from other suppliers in Asia..S Korea December base oils exports fall.Taiwan’s Dec base oils exports hold firm.Asia base oils demand outlook: Week of 20 Jan
· Asia’s base oils prices extend fall vs feedstock/gasoil prices as crude prices hold firm.· Light-grade base oils values slide close to or to discounts to gasoil prices, suggesting refiners face difficulty adjusting prices higher in response to rising feedstock costs.· Weak margins and limited leverage to raise prices incentivize refiners to cut output.· Signs of refinery run-cuts suggest some refiners are already implementing such moves.· Lower output would cut further a supply-surplus that shows signs of being lower than usual for the time of year.· Any disruptions to feedstock supplies from Russia could prompt additional run-cuts in markets like India and China.· Refiners’ stock-building ahead of/during scheduled plant maintenance work in northeast and southeast Asia likely to trim surplus further.· Supply could still get support from an arbitrage that stays hard to work to move cargoes to more distant markets, leaving more shipments in Asia..· South Korea’s base oils exports fall back to unusually low levels in Dec 2024..· Slump in exports points to lower-than-usual stocks in South Korea at end-2024 and moves to replenish inventories ahead of plant maintenance in Q1 2025.· Slump in exports cushions impact of seasonal dip in regional demand at year-end.· Slump in exports leaves regional buyers with lower-than-usual stocks at start of 2025.· Lower export volumes could extend through Q1 2025, until completion of upcoming plant maintenance work.· Lower exports raise prospect of keeping availability of Group II heavy grades tighter than usual.· That trend shows signs of extending to other key suppliers..· Light-grade base oils account for more than 60% of Taiwan’s base oils exports in Dec 2024..· Share rises from around 50% of Taiwan’s total exports in Aug-Nov 2024.· Drop in Taiwan’s heavy-grade base oils exports in Dec 2024, and their lower share of Taiwan’s total exports, add to signs that light-grade base oils accounted for larger share of rise in Asia’s surplus supply at end-2024.· Any extension of dip in Taiwan’s heavy-grade exports into early 2025 raises prospect of prolonging that trend.· Taiwan’s base oils shipments could face challenge of needing to target other markets like Americas once new base oils production capacity starts up in India and southeast Asia in coming year.· Taiwan’s base oils exports faced similar challenge in recent years when China’s rising production capacity cut demand from that market.· Taiwan redirected more shipments to southeast Asia and India instead..· New production capacity could curb number of alternative outlets in Asia, complicating Taiwan’s ability to respond..· Taiwan’s base oils exports hold firm so far in Jan 2025.· Regular flow of shipments could point to moves to front-load cargoes ahead of lunar new year holidays at end-Jan 2025.· Shipments include cargo bound for Pakistan.· Cargo would be second large shipment to Pakistan since Oct 2024.· Most recent cargo from Taiwan to Pakistan before Oct 2024 was in 2019..· Singapore’s four-week base oils exports rebound to highest since end-July 2024 amid surge in shipments to China..· Any extended pick-up in shipments would help to cushion against prospect of lower-than-usual export volumes from South Korea in coming months. · Singapore takes delivery of cargo from UK in H1 Jan 2025, adding to swathe of supplies from Europe in recent months..· Rise in imports from Europe could further cushion impact of tighter availability from other suppliers in Asia..S Korea December base oils exports fall.Taiwan’s Dec base oils exports hold firm.Asia base oils demand outlook: Week of 20 Jan
