Asia base oils supply outlook: Week of 30 Sept

·        Asia’s base oils prices stay unusually firm vs feedstock/competing fuel prices, pointing to tight supply-demand fundamentals.

·        Regional supply likely slips in Sept 2024 from previous month even as firm margins incentivize refiners to boost base oils output.

·        Supplies more likely to remain within the region as arbitrage to Americas gets harder to work.

·        Any additional shipments from other regions to Asia likely to reflect term rather than arbitrage cargoes, with arb still shut from US and Europe.

·        Taiwan’s base oils exports show signs of falling in Sept 2024 from previous two months, reverting to more typical levels.

·        Japan’s base oils exports likely face more pressure in Sept 2024 as seasonal pick-up in domestic demand coincides with ongoing plant shutdown and lower structural production capacity.

·        Singapore’s base oils exports over last four weeks extend recovery to highest level since end-July 2024.

·        Rise in exports helps to cushion prospect of slowdown in shipments from South Korea over coming weeks because of plant maintenance work.

·        Singapore continues to take delivery of more shipments from less regular sources in Sept 2024.

·        Singapore’s base oils imports rise to one-year high in Aug 2024 mostly because of surge in such flows from less regular sources.

·        Shipments include Group I base oils, although volumes are insufficient to balance out loss of supplies from Japan this year.

·        China’s base oils exports fall in Aug 2024 for second time in three months from year-earlier levels.

·        China’s base oils exports fall by more than 55% in three months to Aug 2024 from year-earlier levels, even with rise in country’s base oils output.

·        Fall in exports points to drop in surplus supply to clear, insinuating stock-building or firmer demand.

·        Drop in exports could reflect combination of firmer demand and stock-building, ahead of closure of Group I plant in Oct 2024.

·        Drop in exports tightens further the availability of Group I base oils in Asia-Pacific market.

·        India’s base oils output rises in Aug 2024 from previous month following completion of maintenance work.

·        Impact of rise in unit’s additional production capacity unlikely to be felt until early next year.

·        Asia’s imports of premium-grade base oils from Qatar stay lower than usual for second month in Aug 2024.

·        Any extension of a drop in shipments from Qatar to other key outlets of Europe and US in Aug 2024 would be unusual.

·        Drop in shipments to Asia in Aug 2024 coincides with rise in China’s Group III base oils output and dip in region’s Group III prices relative to prices in Europe.