Asia base oils supply outlook: Week of 22 July

·        Asia’s base oils premium to feedstock/competing fuel prices rises, holds well above year-earlier levels.

·        Asia’s base oils supply shows signs of rising in July 2024, at a time of year when demand is usually muted.

·        Rise in supply could help cover for plant maintenance work in China and India.

·        Rise in supply could replenish regional blenders' stocks, curbing urgency to seek additional volumes.

·        Singapore’s base oils exports extend strong rise in recent weeks, rebounding from slowdown in shipments in June 2024.

·        Taiwan's base oils exports show signs of rising sharply in July 2024 from previous month amid wave of large shipments throughout the month.

·        Most of the shipments move to southeast Asia and India, with only small volume bound for China.

·        South Korea’s base oils exports show signs of rising strongly in H1 July 2024, following slump in shipments in June 2024.

·        Shipments to India show signs of rising strongly, following slump in June 2024.

·        South Korea’s June base oils exports fall to eleven-month low despite lack of any scheduled plant maintenance work.

·        Exports fall even lower than levels when scheduled plant maintenance work was taking place.

·        Drop in exports points to refinery run-cuts or to stock-building.

·        Stock-building would leave additional supplies to clear at start of Q3 2024.

·        Run-cuts would leave the regional market with tighter-than-expected supply at the start of Q3 2024.

·        Exports fall in June 2024 despite firm base oils margins in April and May 2024.

·        Drop in exports follows simultaneous closure of arbitrage to India and China during Q2 2024.

·        Drop in exports could reflect stock-building as closed arbitrage cuts demand.

·        Drop in exports could instead reflect moves to cut run-rates in response to signs of weakening demand in April-May 2024.

·        Such moves would point to decisions based on changes in demand rather than decisions based on base oils margins.

·        South Korea’s base oils exports to Brazil rise to record-high in June 2024.

·        Pick-up in shipments to Brazil coincides with widening premium of US prices over Asia Group II prices, making arbitrage more feasible.

·        Shipments could be precursor for more sustained wave of exports from Asia to Americas over coming months.