Asia base oils supply outlook: Week of 29 April

·        Asia’s base oils supply shows signs of staying balanced for now, could start to rise in coming weeks following completion of maintenance work.

·        Signs of more shipments from Saudi Arabia moving to markets west of Suez Canal in April 2024 curb its supplies in Asia.

·        Arbitrage to move supplies from Asia to Americas/Europe stays hard to work.

·        Arbitrage to move US supplies to India stays feasible, even if less attractive than in Feb-March 2024.

·        South Korea’s base oils exports in April 2024 show signs of lagging levels in March 2024.

·        Exports could get a boost in May 2024 following the scheduled completion of plant maintenance in South Korea in H2 April 2024.

·        Taiwan’s base oils exports this month could exceed March 2024 levels if large cargo completes loading before month-end as scheduled.

·        Singapore’s base oils exports extend recovery in April 2024, following unusual slowdown in shipments in Q1 2024.

·        Singapore’s exports rise strongly to India over last four weeks, contrasting with steady flows to China and unusual slump in shipments to Indonesia.

·        Trend could reflect firmer demand from India for supplies that avoid risk of delays.

·        Shipments from Singapore to India include large volumes of supplies being re-exported from other markets.

·        Singapore’s imports over past week include rare shipment from Poland.

·        Shipment follows open arbitrage to move Group I base oils from Europe to Asia in Q1 2024.

·        Shipment coincides with persistently tight availability of Group I base oils in Asia.

·        Singapore’s exports to southeast Asia rebound in March 2024, contrasting with fall in shipments to China.

·        Trend highlights regional refiners’ focus on reducing their exposure to China and tapping growing demand in other markets instead.

·        Trend raises prospect of leaving China’s base oils supply more balanced and demand for overseas supplies steadier in Q2 2024.

·        China’s demand for supplies from overseas sources like Singapore fell in Q2 2023 as buyers first cleared a build-up of supplies in Q1 2023.

·        Singapore’s base oils imports from Qatar and Hong Kong surge in March 2024.

·        Rise in shipments coincides with falling US Group III prices and slowdown in shipments from Qatar to Europe in early 2024.

·        Lower US prices and ongoing logistical complications with shipments to Europe could spur extension of pick-up in flows of premium-grade base oils to Singapore.

·        Singapore’s March base oils imports include largest shipment from US in five months.

·        Any extension of that trend could add to regional supplies.

·        Most of Saudi Arabia’s base oils exports in April 2024 move to markets west of Suez Canal.

·        Shipments bound for India show signs of falling.

·        Prospect of rise in India’s base oils production capacity in coming year incentivizes overseas refiners to develop opportunities in other markets in anticipation of slowdown in demand from India.

·        Any extension of pick-up in shipments from Saudi Arabia to markets west of Suez Canal would leave the supplier better-positioned to manage any slowdown in demand from India.