· Asia’s base oils margins stay relatively firm even after weakening in response to higher crude/diesel prices in recent weeks.· Firm margins sustain incentive for refiners to maintain higher base oils output.· Speed of recent slide in margins could prompt moves to reassess production levels.· Arbitrage to move surplus supplies to key outlets within Asia stays hard to work.· But CFR prices in destination markets like China and India hold firm or start to rise relative to FOB Asia prices.· Any extension of that trend would start to facilitate pick-up in arbitrage shipments.· Closed arbitrage from Europe and US boosts regional buyers’ reliance on supplies from Asia refiners.· Signs of rise in flows from Saudi Arabia to UAE could curb that market’s requirements for large volumes from Asia.· Taiwan’s June base oils exports stay low so far in June 2024, with most of the shipments moving to southeast Asia.· Singapore’s base oils exports show signs of reverting to more typical levels in June 2024 after higher-than-usual shipments in May 2024.· Singapore and India take delivery of larger-than-usual volume of supplies from Qatar so far in June 2024.· China’s domestic base oils supply likely to be lower in June 2024 because of plant maintenance work.· South Korea’s base oils exports show signs of staying high in June 2024..· South Korea’s May base oils exports rise to seven-month high following completion of plant maintenance work..· South Korea’s base oils exports likely to stay high over coming months amid still-firm margins and lack of scheduled plant maintenance work until late-Q3 2024.· Rise in South Korea’s May exports coincides with higher shipments from Singapore and Taiwan in May 2024.· Higher shipments likely to trigger build-up of surplus supplies in Asia before end of Q2 2024.· Surplus supplies still show signs of staying lower than usual so far in Q2 2024.· A smaller surplus could curb urgency for refiners to trim output.· A smaller surplus could also help to sustain steadier demand by curbing prospect of large price correction..· India’s May base oils imports from Singapore stay unusually high for second month..· India’s May base oils imports from Saudi Arabia recover to seven-month high, pointing to increasingly limited impact of logistical disruptions in Red Sea region.· India takes delivery of additional shipment from Saudi Arabia in H1 June 2024.· Rise in shipments from Singapore and Saudi Arabia highlights ongoing importance of India as key outlet for supplies.· Rise in shipments to India curbs need for supplies from more distant markets like US.· Tighter supply-demand fundamentals in US market curb impact of closed arbitrage to India for now.· Indian blenders’ high stocks, and surge in base oils exports from South Korea to India in May 2024, likely to limit impact of planned shutdown of base oils unit in the country from mid-June 2024.· Plant maintenance work could also help speed up consumption of blenders’ high stocks..Asia base oils demand outlook: Week of 24 June
· Asia’s base oils margins stay relatively firm even after weakening in response to higher crude/diesel prices in recent weeks.· Firm margins sustain incentive for refiners to maintain higher base oils output.· Speed of recent slide in margins could prompt moves to reassess production levels.· Arbitrage to move surplus supplies to key outlets within Asia stays hard to work.· But CFR prices in destination markets like China and India hold firm or start to rise relative to FOB Asia prices.· Any extension of that trend would start to facilitate pick-up in arbitrage shipments.· Closed arbitrage from Europe and US boosts regional buyers’ reliance on supplies from Asia refiners.· Signs of rise in flows from Saudi Arabia to UAE could curb that market’s requirements for large volumes from Asia.· Taiwan’s June base oils exports stay low so far in June 2024, with most of the shipments moving to southeast Asia.· Singapore’s base oils exports show signs of reverting to more typical levels in June 2024 after higher-than-usual shipments in May 2024.· Singapore and India take delivery of larger-than-usual volume of supplies from Qatar so far in June 2024.· China’s domestic base oils supply likely to be lower in June 2024 because of plant maintenance work.· South Korea’s base oils exports show signs of staying high in June 2024..· South Korea’s May base oils exports rise to seven-month high following completion of plant maintenance work..· South Korea’s base oils exports likely to stay high over coming months amid still-firm margins and lack of scheduled plant maintenance work until late-Q3 2024.· Rise in South Korea’s May exports coincides with higher shipments from Singapore and Taiwan in May 2024.· Higher shipments likely to trigger build-up of surplus supplies in Asia before end of Q2 2024.· Surplus supplies still show signs of staying lower than usual so far in Q2 2024.· A smaller surplus could curb urgency for refiners to trim output.· A smaller surplus could also help to sustain steadier demand by curbing prospect of large price correction..· India’s May base oils imports from Singapore stay unusually high for second month..· India’s May base oils imports from Saudi Arabia recover to seven-month high, pointing to increasingly limited impact of logistical disruptions in Red Sea region.· India takes delivery of additional shipment from Saudi Arabia in H1 June 2024.· Rise in shipments from Singapore and Saudi Arabia highlights ongoing importance of India as key outlet for supplies.· Rise in shipments to India curbs need for supplies from more distant markets like US.· Tighter supply-demand fundamentals in US market curb impact of closed arbitrage to India for now.· Indian blenders’ high stocks, and surge in base oils exports from South Korea to India in May 2024, likely to limit impact of planned shutdown of base oils unit in the country from mid-June 2024.· Plant maintenance work could also help speed up consumption of blenders’ high stocks..Asia base oils demand outlook: Week of 24 June