Asia base oils supply outlook: Week of Feb 26

·        Asia’s base oils supply stays balanced to tight, likely to improve over coming month.

·        Arbitrage to move Asia shipments to other regions like Europe and Latin America likely to stay hard to work.

·        Arbitrage to move US shipments to Asia stays more feasible, raising prospect of continuation of US supplies moving to the region.

·        Arbitrage to move Europe Group I supplies to Asia stays more feasible.

·        Fire at South Korean refinery raises uncertainty about impact on supply from that market.

·        Taiwan’s Group II base oils exports recover slowly since mid-Feb 2024.

·        Asia’s Group I base oils supply likely to remain tight at least for the next month.

·        Exports from China show signs of slowing amid seasonal rise in domestic demand and ahead of upcoming plant maintenance work.

·        Thailand’s Group I base oils supply likely to remain tight as refiners replenish stocks after maintenance work.

·        Singapore’s base oils exports stay rangebound.

·        Singapore’s Group I base oils supply likely to remain tight amid ongoing slump/pause in imports from markets like Japan, China and Europe.

·        Singapore’s Group I supply gets a boost following arrival of large cargo of Russian origin in 2H Feb 2024.

·        Asia’s base oils output falls more sharply than regional demand in Dec 2023, cutting surplus.

·        Asia’s lower base oils supply surplus at start of 2024 contrasts with much higher surplus at start of 2023.

·        Lower surplus leaves region’s refiners better-positioned to maintain firmer margins during seasonal rise in demand over coming months.

·        Refiners’ improved leverage over prices and margins highlights benefit of managing supply carefully. 

·        Southeast Asia remains largest outlet for Singapore’s base oils exports in Jan 2024.

·        Southeast Asia’s growing base oils demand facilitates Singapore’s moves to expand its markets and cut any over-reliance on any single market.

·        Trend cushions against China’s slowdown in base oils requirements from overseas markets.

·        Trend cushions against prospect of similar trend in India in coming years.

·        India’s base oils imports from Saudi Arabia show signs of slowing in Feb 2024.

·        Any such slowdown likely to boost domestic buyers’ demand for supplies from other sources.

·        Shipment time for supplies from other sources like South Korea or US would be longer than shipments from Saudi Arabia.

·        Asia’s January base oils exports to the Mideast Gulf rebound from sixteen-month low in Dec 2023.

·        Mideast Gulf market provided key outlet for surplus supplies from Asia in 2023.

·        Start-up and availability of premium-grade supplies from India over the coming year could impact Mideast Gulf’s demand for premium-grade supplies from Asia.