· Asia’s base oils supply likely to stay balanced as low margins, plant closure squeeze Group I supply.· Ongoing plant maintenance in Taiwan curbs Group II base oils supply.· Closed arbitrage from US slashes flows from that market to India.· China’s domestic Shandong diesel premium to crude oil extends slide to three-month low.· Lower diesel premium to crude contrasts with firmer domestic base oil premium to diesel.· Trend incentivizes China’s domestic refiners to boost base oils output.· Refiners likely to remain wary of any such moves in face of slacker-than-usual demand.· Group II base oil exports from Taiwan slump in October amid ongoing plant maintenance work.· Japan’s Group I exports likely to fall more following permanent closure of another base oils plant in the country..· More limited supply in Q4 2023 follows smaller-than-expected rise in Asia’s surplus of supply over demand in August and in Q3 2023..· Smaller supply-build in Q3 2023 and regional plant maintenance work in Q4 2023 raises prospect of relatively balanced supply over coming months.· Trend likely to mean avoidance of repeat of last year’s surge of arbitrage shipments from Asia to more distant markets.· Trend likely to give regional refiners more leverage over prices, especially if arbitrage from US stays shut..· South Korea’s September base oils exports stay lower than usual even after completion of plant maintenance work in July..· Muted recovery in exports contrasts with firmer pick-up in domestic base oils production.· Trend points either to rise in stocks or diversion of base oils back into diesel pool at a time when margins remained weak.· Muted recovery in South Korea's base oils exports curbs size of regional supply-build in Q3 2023..· South Korea’s September base oils exports to southeast Asia fall to nine-month low as dip in supplies to Indonesia outweighs surge in flows to Philippines..· Trend reflects more the competition with Singapore for market share in different countries rather than the current demand dynamics in those markets.· South Korea’s lower exports to Indonesia coincide with Singapore’s rising share of that market’s imports, and vice-versa for Philippines..· Indonesia’s Group III base oils exports rebound to thirteen-month high in August, reverting to the higher levels in 1H 2022..· Rise in exports could reflect cargo loadings pushed from July into August, rather than rise in Group III base oils production.· Any extension of rise in exports into September would point to more sustained rise in production.· Any such move would add to global supplies of Group III base oils with approvals..· India likely to see steady rather than higher flow of shipments reaching the country from Asia in October.· South Korea’s September base oils exports to India hold firm at similar levels to August..· Singapore’s base oils exports to India show signs of holding steady in recent weeks at lower levels than August.· Last large September-loading cargo from Taiwan moves to India, arrives in mid-October, before pause in any subsequent flows from Taiwan..· India takes delivery of more Group I heavy grades from Thailand in October, extending large flow of arbitrage shipments from the southeast Asian country in recent months.· India shows signs of taking more naphthenic base oils from China..Global base oils - week of Oct 23: Price outlook - margins
· Asia’s base oils supply likely to stay balanced as low margins, plant closure squeeze Group I supply.· Ongoing plant maintenance in Taiwan curbs Group II base oils supply.· Closed arbitrage from US slashes flows from that market to India.· China’s domestic Shandong diesel premium to crude oil extends slide to three-month low.· Lower diesel premium to crude contrasts with firmer domestic base oil premium to diesel.· Trend incentivizes China’s domestic refiners to boost base oils output.· Refiners likely to remain wary of any such moves in face of slacker-than-usual demand.· Group II base oil exports from Taiwan slump in October amid ongoing plant maintenance work.· Japan’s Group I exports likely to fall more following permanent closure of another base oils plant in the country..· More limited supply in Q4 2023 follows smaller-than-expected rise in Asia’s surplus of supply over demand in August and in Q3 2023..· Smaller supply-build in Q3 2023 and regional plant maintenance work in Q4 2023 raises prospect of relatively balanced supply over coming months.· Trend likely to mean avoidance of repeat of last year’s surge of arbitrage shipments from Asia to more distant markets.· Trend likely to give regional refiners more leverage over prices, especially if arbitrage from US stays shut..· South Korea’s September base oils exports stay lower than usual even after completion of plant maintenance work in July..· Muted recovery in exports contrasts with firmer pick-up in domestic base oils production.· Trend points either to rise in stocks or diversion of base oils back into diesel pool at a time when margins remained weak.· Muted recovery in South Korea's base oils exports curbs size of regional supply-build in Q3 2023..· South Korea’s September base oils exports to southeast Asia fall to nine-month low as dip in supplies to Indonesia outweighs surge in flows to Philippines..· Trend reflects more the competition with Singapore for market share in different countries rather than the current demand dynamics in those markets.· South Korea’s lower exports to Indonesia coincide with Singapore’s rising share of that market’s imports, and vice-versa for Philippines..· Indonesia’s Group III base oils exports rebound to thirteen-month high in August, reverting to the higher levels in 1H 2022..· Rise in exports could reflect cargo loadings pushed from July into August, rather than rise in Group III base oils production.· Any extension of rise in exports into September would point to more sustained rise in production.· Any such move would add to global supplies of Group III base oils with approvals..· India likely to see steady rather than higher flow of shipments reaching the country from Asia in October.· South Korea’s September base oils exports to India hold firm at similar levels to August..· Singapore’s base oils exports to India show signs of holding steady in recent weeks at lower levels than August.· Last large September-loading cargo from Taiwan moves to India, arrives in mid-October, before pause in any subsequent flows from Taiwan..· India takes delivery of more Group I heavy grades from Thailand in October, extending large flow of arbitrage shipments from the southeast Asian country in recent months.· India shows signs of taking more naphthenic base oils from China..Global base oils - week of Oct 23: Price outlook - margins