Asia base oils supply outlook: Week of 4 Nov

·        Asia’s base oils price-premium to feedstock/diesel prices holds firm in narrower range since end-Aug 2024.

·        Firm base oils margins incentivize refiners to raise or maintain higher output.

·        Base oils margins stay at higher levels even after holding firm since start of Q2 2024.

·        Sustained strength of margins points to ongoing supply-tightness even with incentive for refiners to raise output.

·        Margins stay high even with expected completion of maintenance work at key base oils unit.

·        Asia’s base oils prices continue to strengthen versus prices in other key markets like US and Europe.

·        Firmer price differential makes arbitrage less attractive, raises prospect of more supplies staying in Asia-Pacific region.

·        Asia’s base oils exports likely to improve in Nov 2024.

·        Asia’s base oils exports likely stayed lower than usual in Oct 2024 after falling in Sept 2024 to lowest since mid-2020.

·        Fall in shipments coincides with seasonal rise in regional demand.

·        Fall in shipments and firmer demand squeeze supply in markets like southeast Asia and India.

·        Fall in shipments curbs availability for more distant regions or need to move large volumes to more distant regions.

·        South Korea’s base oils output falls to five-month low in Sept 2024.

·        Output falls less steeply than slump in South Korea’s base oils exports in Sept 2024.

·        Surplus of output over exports duly rises to three-year high.

·        Rise in surplus supply in Sept 2024 should help to limit further drop in South Korea’s base oils exports in Oct 2024 during plant maintenance work.

·        South Korea’s base oils output and exports should start to revive in Nov 2024 following completion of maintenance work.

·        Japan’s base oils output edges up in Sept 2024, holds close to lowest since late-2021.

·        Sustained fall in Japan’s base oils output boosts requirements for imports, slashes exports.

·        Rising imports of premium-grade base oils and falling exports of Group I base oils cuts supply for other markets.

·        China’s base oils output shows signs of trending higher in Oct 2024 even with closure of key Group I base oils unit in the country.

·        Trend raises prospect of trimming country’s requirements for premium-grade base oils, supporting demand for overseas supplies of Group I base oils.

·        Singapore’s base oils exports show signs of holding firm at typical levels in Oct 2024.

·        Steady exports limit any additional volumes to balance out drop in South Korea’s base oils output in Oct 2024.

·        India’s base oils output unexpectedly falls in Sept 2024.

·        Output recovers in Aug 2024 after production dips to three-year low in July 2024 because of plant maintenance.

·        Extension of recovery goes into reverse in Sept 2024, pointing to additional production issues.

·        Lower output compounds India’s tight supply-demand balance, highlights growing need for additional supplies from domestic or overseas sources.

·        Taiwan’s base oils exports face delays in past week as another typhoon strikes the island.

·        Exports in Oct 2024 already far exceed shipment volumes in Sept 2024.

·        Any delayed shipments set to boost export volumes in Nov 2024.

·        Base oils exports from Saudi Arabia shows signs of slowing in Oct 2024 from previous month.

·        Slowdown in shipments would exacerbate impact of expected fall in shipments from South Korea to outlets like India in Oct 2024.