Asia base oils supply outlook: Week of 21 April

·         Asia’s base oils prices stay high relative to feedstock/competing fuel prices even as they edge lower.

·         Firm margins point to tight supply-demand fundamentals.

·         Margins hold firm even with demand fundamentals showing signs of easing and some plant maintenance work drawing to a close.

·         Any improvement in supply would boost importance of arbitrage outlets to place surplus volumes.

·         Asia’s Group II light-grade price-discount to US export prices widens in H2 Apr 2025 after mostly narrowing in since Sept 2024.

·         Narrower discount to US prices complicates arbitrage flows since then.

·         Shipment from South Korea to Brazil in March 2025 points to ongoing flows to Americas.

·         Shipment suggests some arbitrage cargoes were already lined up to move to Americas in Q1 2025 at price levels that made arb workable.

·         Any further widening of Asia Group II N150 price-discount to US export prices could trigger more frequently flow of shipments to Americas.

·         Any such flows would help to balance out tighter availability of Group II light grades in US market.

·         Taiwan's base oils exports likely be higher than usual in April 2025 amid regular flow of shipments so far this month.

·         Heavy-grade base oils account for more than half the April volume.

·         Singapore’s weekly base oils exports to mid-April 2025 rise to one-month high.

·         Exports over past four weeks still fall to lowest in more than two months.

·         Slowdown in shipments points more to reversion to more typical export volumes.

·         Surge in exports in Feb-March 2025 was more unusual and coincided with seasonal rise in demand, as well as plant maintenance work in markets like South Korea.

·         South Korea’s base oils exports fall in March 2025 as plant maintenance cuts supply.

·         Even lower exports in Dec 2024-Jan 2025 added to tight regional fundamentals, supporting firm base oils prices.

·         Lower exports in March 2025 could have more muted impact on regional fundamentals amid seasonal slowdown in demand and completion of plant-maintenance work at start of Q2 2025.

·         Asia’s Group I base oils supply could stay tighter because of recent, ongoing and upcoming plant maintenance in Asia, Middle East and Europe.

·         Steady flows from Europe to southeast Asia see slowdown over past month, with most recent shipment from UK or Italy reaching Singapore more than a month ago.

·         Slowdown in shipments coincides with plant-maintenance in Italy and tight Group I supply in Europe.

·         Slowdown shows signs of extending at least into May 2025.

·         India’s base oils imports rise to ten-month high in March 2025.

·         Higher imports partially balance out impact of higher demand in March 2025.

·         Imports stay high even during round of plant maintenance work in South Korea and drop in arbitrage shipments from US.

·         Imports could continue to hold firm in April 2025 amid pick-up in arbitrage flows from US and signs of still-high volumes from South Korea.

·         South Korea’s base oils exports to India rise to seven-month high in March 2025 even as its total exports fall.

·         High exports suggest plant maintenance work in South Korea has limited impact on shipments to India.

·         High exports likely to boost India’s supply at start of Q2 2025.