· China’s Shandong diesel premium to crude oil rises after falling close to lowest in a year.· Firmer diesel premium and weaker domestic base oils premium to diesel incentivizes refiners to focus on producing more motor fuels.· China’s diesel demand faces seasonal slowdown amid hot, rainy weather.· India’s retail diesel premium to crude oil stays high, even with rising crude oil prices.· High premium incentivizes high run-rates.· Peak base oils plant-maintenance season ends, but more maintenance work takes place at least through August.· Squeezed margins incentivize other refiners to trim run-rates.· Market faces additional plant maintenance in Q4 2023, and upcoming closure of Group I base oils plant.· Asia’s base oils supply surplus over demand narrows throughout Q2 2023, pointing to smaller supply-overhang being carried into Q3 2023..· China’s domestic base oils supply surplus may be smaller than expected over coming weeks as additional plant maintenance counters seasonal dip in demand.· South Korea’s June base oils exports fall to lowest since May 2020, when lockdowns slashed base oils demand..· Fall in South Korea’s Q2 base oils exports curbs supply-build ahead of seasonal slowdown in demand during Q3 2023.· Trend leaves South Korea’s refiners better positioned to maintain supply-demand balance during Q3 2023 by adjusting output in response to lower demand.· Trend may be more challenging following restart of base oils unit after maintenance; trend may get support from additional shutdown in August.· Any sign of build-up of surplus supplies would prompt buyers to hold back in anticipation of steeper price adjustment to clear surplus volumes.· Any sign of more balanced supplies would incentivize steadier buying.· Fall in Singapore’s base oils exports in Q2 2023 from Q1 2023 add to signs of more balanced regional supply heading into Q3 2023..· Like South Korea, trend of maintaining exports at level that avoid supply-build in Q3 2023 may be more challenging following completion of plant maintenance work.· Surge in premium-grade supplies from Qatar to Asia in Q2 2023 contrasts with steadier flows to Europe and US..· Trend could reflect moves to avoid oversupply in Europe/US markets, where Group III prices faced more pressure in recent months.· Trend likely helps to cushion impact of Group III plant maintenance work in Asia in Q2 2023.· Any extension of that trend into Q3 2023 could leave supply exceeding regional demand.· India’s base oils supply stays plentiful despite slowdown in shipments from South Korea..· Arbitrage shipments from other regions more than counter slowdown in exports from South Korea in Q2 2023.· India’s supply gets further boost from arrival of more US shipments in month of July..Global base oils - week of July 24: Price outlook - margins
· China’s Shandong diesel premium to crude oil rises after falling close to lowest in a year.· Firmer diesel premium and weaker domestic base oils premium to diesel incentivizes refiners to focus on producing more motor fuels.· China’s diesel demand faces seasonal slowdown amid hot, rainy weather.· India’s retail diesel premium to crude oil stays high, even with rising crude oil prices.· High premium incentivizes high run-rates.· Peak base oils plant-maintenance season ends, but more maintenance work takes place at least through August.· Squeezed margins incentivize other refiners to trim run-rates.· Market faces additional plant maintenance in Q4 2023, and upcoming closure of Group I base oils plant.· Asia’s base oils supply surplus over demand narrows throughout Q2 2023, pointing to smaller supply-overhang being carried into Q3 2023..· China’s domestic base oils supply surplus may be smaller than expected over coming weeks as additional plant maintenance counters seasonal dip in demand.· South Korea’s June base oils exports fall to lowest since May 2020, when lockdowns slashed base oils demand..· Fall in South Korea’s Q2 base oils exports curbs supply-build ahead of seasonal slowdown in demand during Q3 2023.· Trend leaves South Korea’s refiners better positioned to maintain supply-demand balance during Q3 2023 by adjusting output in response to lower demand.· Trend may be more challenging following restart of base oils unit after maintenance; trend may get support from additional shutdown in August.· Any sign of build-up of surplus supplies would prompt buyers to hold back in anticipation of steeper price adjustment to clear surplus volumes.· Any sign of more balanced supplies would incentivize steadier buying.· Fall in Singapore’s base oils exports in Q2 2023 from Q1 2023 add to signs of more balanced regional supply heading into Q3 2023..· Like South Korea, trend of maintaining exports at level that avoid supply-build in Q3 2023 may be more challenging following completion of plant maintenance work.· Surge in premium-grade supplies from Qatar to Asia in Q2 2023 contrasts with steadier flows to Europe and US..· Trend could reflect moves to avoid oversupply in Europe/US markets, where Group III prices faced more pressure in recent months.· Trend likely helps to cushion impact of Group III plant maintenance work in Asia in Q2 2023.· Any extension of that trend into Q3 2023 could leave supply exceeding regional demand.· India’s base oils supply stays plentiful despite slowdown in shipments from South Korea..· Arbitrage shipments from other regions more than counter slowdown in exports from South Korea in Q2 2023.· India’s supply gets further boost from arrival of more US shipments in month of July..Global base oils - week of July 24: Price outlook - margins
