· Asia’s base oils supply faces prospect of rising amid surging margins, scant regional plant maintenance work.· Arbitrage gets even harder to work to markets within the region.· Arbitrage stays hard to work to more distant markets.· Growing signs of more muted demand from India curbs that market’s ability to carry on absorbing large volumes of supplies the way it did in early-Q2 2024.· A slowdown in India's requirements would put pressure on regional refiners to boost exports to China or southeast Asia or to cut output to limit a supply-build.· Slowdown in arbitrage shipments from US curb competition from that market for outlets like India to clear any surplus volumes.· Singapore’s base oils exports show signs of edging down in May 2024 vs April 2024.· Taiwan’s base oils exports show signs of staying lower than usual in May 2024, with sustained slowdown in shipments of heavy grades.· South Korea’s base oils exports likely to rise in May 2024 from previous month following completion of plant maintenance work.· South Korea’s exports in May 2024 show signs of easing to India and UAE, rising to China from previous month.· Indonesia’s Group III base oils exports show signs of slowing in May 2024 from previous month.· Regional Group I refiners could face less risk of oversupply even with rising margins.· Steep discount of Group I base oils prices to Group II prices likely to sustain steadier demand even if more surplus volumes become available..· China’s domestic Group II base oils supply could tighten over the coming weeks because of several overlapping plant shutdowns.· China’s April base oils imports fall to lowest for month of April in at least seven years.· Slowdown reflects China’s growing self-sufficiency, keeps pressure on overseas suppliers to move more shipments to alternative outlets.· China’s April base oils exports rise to six-month high as shipments to India surge..· Any extension of that pick-up in shipments would add to region’s supply and to Indian buyers’ leverage in face of growing number of supply sources.· Premium of China’s domestic N150 prices over CFR India Group II N150 falls in May 2024 to narrowest since early Nov 2023.· Narrower premium increases incentive to export surplus Group II supplies to outlets like India..· South Korea’s April base oils exports to India rise to second-highest level in more than two years..· Shipments coincide with rise in flows from Taiwan and Singapore to India during Q2 2024 and arrival of several arbitrage shipments from US in May 2024.· Shipments raise prospect of extending rebound in India’s base oils imports through May 2024.· India’s rise in imports in April-May 2024 leaves blenders with higher stocks ahead of start of monsoon season and scheduled plant shutdown in June 2024..· Supplies available for India could rise further after CFR India N70 price premium to Singapore gasoil prices extends rise to six-month high..· Prospect of steady-to-higher supplies coincide with signs of more muted demand.· Demand from Middle East for supplies from Asia could stay muted for now as buyers first consume existing supplies.· Demand from that region for supplies from Asia could start to improve in the coming weeks amid prospect of slowdown in shipments from US and Europe compared with Q1 2024, limiting alternative supply options..Asia base oils demand outlook: Week of 27 May
