Asia base oils supply outlook: Week of 28 Oct

·        Asia’s base oils price premium to feedstock/gasoil prices stays high, especially for heavy grades.

·        Base oils premium set to get further boost from fall in crude oil prices at start of this week.

·        Firm base oils premium points to still-tight supply-demand fundamentals.

·        Asia’s base oils supply should start to improve in coming weeks as regional plant maintenance draws to a close.

·        Market faces time-lag between end of plant maintenance work, resumption of normal production and subsequent delivery of larger volumes to overseas markets.

·        Arbitrage to move cargoes from Asia to markets like Americas gets harder to work.

·        Less feasible arbitrage likely to keep more supplies within Asia-Pacific region.

·        Arbitrage to move cargoes from US to markets like India gets more feasible, especially for heavy grades, and especially if US prices extend their steady fall.

·        Southeast Asia continues to take delivery of additional shipments from Europe, despite closed arbitrage.

·        Additional shipments partially cushion impact of dip in Asia-Pacific exports to southeast Asia in Aug-Sept 2024.

·        Singapore’s base oils imports get boost in Sept 2024 from sustained pick-up in shipments from Europe and US.

·        Rise in shipments boosts Europe/US share of Singapore’s imports to 32% of total imports in Q3 2024, up from 27% share in Q2 2024 and 13% share in 2023.

·        Rise in shipments shows signs of extending through Oct 2024, especially for supplies from Europe, keeping import volumes higher than usual.

·        Singapore’s base oils exports over last four weeks fall more sharply.

·        Drop in shipments raises prospect of fall in Singapore’s total exports in Oct 2024.

·        Any such slowdown would compound region’s tighter supply at start of Q4 2024 because of plant maintenance work.

·        China’s base oils exports rise to five-month high in Sept 2024, with unusually large volume moving to South Korea.

·        Unusual shipment points to tighter-than-usual supply in South Korea.

·        Shipment to South Korea coincides with plant maintenance in the country as well as extended plant maintenance work in Japan.

·        South Korea is largest market for Japan’s base oils exports.

·        South Korea’s base oils output and exports likely to recover in Nov 2024 following completion of plant maintenance work.

·        Recovery in output could curb its requirements for supplies from markets like China.

·        Taiwan’s base oils exports show signs of rising strongly in Oct 2024 vs Sept 2024.

·        Most of Taiwan's shipments continue to move to markets like southeast Asia rather than to China.