· Asia’s base oils price premium to feedstock/competing fuel prices extends rise, incentivizing refiners to maintain or raise output through Q3 2024.· Surplus of supply over demand typically rises strongly in the months of July and August each year.· Firm base oils premium to gasoil increases prospect of such a scenario and subsequent need to clear that surplus.· Sustained strength of base oils premium could also point to supply-demand fundamentals that are more balanced than usual.· Firm premium to gasoil coincides with closed arbitrage from US to Asia, curbing flow of additional spot shipments from that market.· Firm premium coincides with open arbitrage from Asia to Americas, with any such shipments trimming regional supplies.· Firm premium to gasoil coincides with increasingly wide premium of Europe Group II prices over FOB NE Asia prices, making that arbitrage more feasible.· South Korea’s base oils exports show signs of staying lower than usual in Aug 2024.· Any such slowdown would precede scheduled shutdown of major Group II unit in South Korea in Sep 2024.· Taiwan’s base oils exports rise strongly in H2 Aug 2024.· Total exports in Aug 2024 likely to hold above typical levels this year, stay well below levels in July 2024.· Saudi Arabia’s base oils exports show signs of rising strongly in Aug 2024 vs July 2024, with pick-up in shipments to UAE and India..· Singapore’s base oils exports stay lower over past four weeks, contrasting with surge in shipments in July 2024..· Singapore’s base oils exports rise to eleven-month high in July 2024..· Rise in exports adds to pick-up in shipments from Taiwan, South Korea and China in July 2024..· Asia’s base oils price premium to gasoil prices holds firm in July 2024 and this month, suggesting demand was sufficient to absorb the rise in exports from those sources.· Asia-Pacific region began Q3 2024 with smaller-than-usual supply surplus, supporting such a scenario of sufficient demand at least in first few weeks of the quarter.· Singapore takes delivery over past week of more large shipments from the US and Netherlands.· Shipments from US become increasingly frequent; shipments from Netherlands remain rarer.· Shipments add to regional supply, at a time when arbitrage from US to Asia remains shut..· China’s base oils imports account for less than 20% of country’s base oils supply in July 2024..· Share is lowest in nine months, extends trend of shrinking share throughout this year from more than 28% in 2023.· China’s ongoing fall in requirements for overseas supplies puts onus on regional refiners to continue to focus on targeting and expanding other outlets for their base oils shipments..Asia base oils demand outlook: Week of 26 Aug.China’s July base oils imports fall
