Asia base oils supply outlook: Week of 21 Oct

·        Asia base oils prices rebound vs feedstock/competing fuel prices.

·        Persistently-high base oils margins point to firm supply-demand fundamentals, sustain incentive for refiners to raise or maintain higher output.

·        Regional supply-demand balance likely stays tight in Oct 2024, could start to improve from Nov 2024.

·        Signs of pick-up in shipments from Asia to UAE in Sept-Oct 2024 could further tighten regional availability.  

·        Less feasible arbitrage to Americas likely to curb flows from Asia to that market.

·        Supply could get further boost from signs of increasingly steady flows from Europe to Asia.

·        Taiwan’s base oils exports in Oct 2024 likely to exceed shipment volumes in Sept 2024.

·        Pace of Taiwan’s exports slows in H2 Oct 2024 after surge in shipments in H1 Oct 2024.

·        Most of Taiwan’s shipments move to southeast Asia rather than China so far in Oct 2024.

·        Singapore’s base oils exports over past four weeks continue to hold steady at more typical levels.

·        Singapore’s base oils supply gets boost from arrival of wave of shipments from Europe and Russia in Oct 2024.

·        Increasingly regular flow of shipments from Europe to Singapore contrasts with signs of slowdown in shipments from US.

·        Flow of shipments from Europe likely include Group I base oils, for which southeast Asia is short, and Group II base oils, for which regional supply is more readily available.

·        Arrival of second large cargo from Russia in less than two months points to pick-up in pace of such shipments to Singapore in H2 2024.

·        South Korea’s base oils exports fall in Sept 2024 to lowest since at least 2010 as plant maintenance begins.

·        Size of slump in shipments forces buyers to tap stocks or to seek supplies from alternative sources instead.

·        Slump in shipments cuts Asia’s supply availability that already tightened in Aug 2024.

·        Tight availability helps region to avoid typical clear-out of surplus supplies at end of third quarter.

·        Lack of such arbitrage shipments removes opportunity for buyers in markets like India and Middle East to build up stocks at competitive price levels.

·        Saudi Arabia’s base oils exports show signs of holding firm this month after already staying at higher levels in Aug-Sept 2024.

·        Firm export volumes could provide buyers in India and UAE with key source of supplies at a time when availability from Asia is tighter.