· Asia’s base oils supply likely to remain balanced-to-tight amid run-cuts, plant maintenance work, lower supply-build during summer months and firmer demand.· Refiners face challenge of covering immediate demand and managing prospect of growing caution among buyers in Q4 2023 amid wariness about demand prospects.· China’s Shandong diesel premium to crude oil edges down, stays well above early-July lows..· Firm Asia diesel values vs crude and weak base oil values incentivize base oils producers to limit production to cover term commitments only.· Recent/upcoming plant maintenance, run-cuts or unexpected shutdowns include plants in China, South Korea, Japan, Taiwan, Thailand and India. · Prospect of new base oils capacity in Asia unlikely to have any immediate impact as buyers wait for production/specifications to stabilize.· Swathe of China’s recently-added capacity remains off-line, reflecting pressure of squeezed margins..· China’s August Group II base oils output stays unusually low, curbing domestic supply just weeks ahead of seasonal pick-up in demand.· .· Low Group II output coincided with weak base oils margins that incentivized run-cuts and extended plant maintenance work.· Low Group II output suggests refiners wary of strength of seasonal pick-up in demand.· Trend leaves domestic blenders more reliant on overseas supplies to secure any additional requirements..· South Korea’s July base oils output improves from June following restart of Group III unit..· Base oils output still holds at second-lowest level in more than two years, likely to remain lower than usual over following months as weak margins incentivize run-cuts..· Thailand’s base oils refiners’ July output holds steady, contrasting with sliding domestic demand and slowdown in exports..· Trend raises prospect of supply-build that coincides with already weak base oils margins.· Trend incentivizes refiners to cut production..· Japan’s July base oils output holds in narrow range, well below year-earlier levels..· Plant maintenance work and imminent closure of base oils unit likely to cut output more sharply over coming months..· Singapore’s July base oils imports from Mideast Gulf fall to five-month low, reflecting dip in flows of Group III base oils to the island-state..· Imports from Mideast Gulf show signs of reviving in August but stay well below May-June levels.· Recent slowdown in shipments to Asia follows drop in regional Group III prices, making arbitrage less attractive..· Singapore’s base oils exports hold steady during Q3 2023 despite slowdown in shipments to key markets of China and India, especially in July..· Steady shipments reflect ongoing diversification of supplies away from those two markets and towards southeast Asia..· Singapore’s base oils exports show signs of rising in August to five-month high, even with still muted flows to China and India..· Australia’s growing lube demand over past year boosts its attraction for Asia-Pacific suppliers.· South Korea’s base oils exports to Australia rise in first seven months of 2023, contrasting with slowdown in shipments from Singapore.. · Trend adds to growing number of regional markets where share of base oils supplies from Singapore and South Korea shows signs of changing..Global base oils - week of Sep 4: Price outlook - arbitrage
· Asia’s base oils supply likely to remain balanced-to-tight amid run-cuts, plant maintenance work, lower supply-build during summer months and firmer demand.· Refiners face challenge of covering immediate demand and managing prospect of growing caution among buyers in Q4 2023 amid wariness about demand prospects.· China’s Shandong diesel premium to crude oil edges down, stays well above early-July lows..· Firm Asia diesel values vs crude and weak base oil values incentivize base oils producers to limit production to cover term commitments only.· Recent/upcoming plant maintenance, run-cuts or unexpected shutdowns include plants in China, South Korea, Japan, Taiwan, Thailand and India. · Prospect of new base oils capacity in Asia unlikely to have any immediate impact as buyers wait for production/specifications to stabilize.· Swathe of China’s recently-added capacity remains off-line, reflecting pressure of squeezed margins..· China’s August Group II base oils output stays unusually low, curbing domestic supply just weeks ahead of seasonal pick-up in demand.· .· Low Group II output coincided with weak base oils margins that incentivized run-cuts and extended plant maintenance work.· Low Group II output suggests refiners wary of strength of seasonal pick-up in demand.· Trend leaves domestic blenders more reliant on overseas supplies to secure any additional requirements..· South Korea’s July base oils output improves from June following restart of Group III unit..· Base oils output still holds at second-lowest level in more than two years, likely to remain lower than usual over following months as weak margins incentivize run-cuts..· Thailand’s base oils refiners’ July output holds steady, contrasting with sliding domestic demand and slowdown in exports..· Trend raises prospect of supply-build that coincides with already weak base oils margins.· Trend incentivizes refiners to cut production..· Japan’s July base oils output holds in narrow range, well below year-earlier levels..· Plant maintenance work and imminent closure of base oils unit likely to cut output more sharply over coming months..· Singapore’s July base oils imports from Mideast Gulf fall to five-month low, reflecting dip in flows of Group III base oils to the island-state..· Imports from Mideast Gulf show signs of reviving in August but stay well below May-June levels.· Recent slowdown in shipments to Asia follows drop in regional Group III prices, making arbitrage less attractive..· Singapore’s base oils exports hold steady during Q3 2023 despite slowdown in shipments to key markets of China and India, especially in July..· Steady shipments reflect ongoing diversification of supplies away from those two markets and towards southeast Asia..· Singapore’s base oils exports show signs of rising in August to five-month high, even with still muted flows to China and India..· Australia’s growing lube demand over past year boosts its attraction for Asia-Pacific suppliers.· South Korea’s base oils exports to Australia rise in first seven months of 2023, contrasting with slowdown in shipments from Singapore.. · Trend adds to growing number of regional markets where share of base oils supplies from Singapore and South Korea shows signs of changing..Global base oils - week of Sep 4: Price outlook - arbitrage