· Asia’s base oils premium to feedstock/gasoil prices extends rise, contrasts with unusually weak premium in Q3 2023.
· Increasingly firm premium points to tight supply-demand fundamentals, incentives refiners to raise output.
· Supply surplus could build if refiners duly raise output and fundamentals are less tight than prices suggest.
· Feasibility of moving arbitrage shipments to overseas markets like Americas continues to improve.
· Any such arbitrage shipments would need to be lined up soon in order to reach Americas before likely seasonal slowdown in demand in that market in Q4 2024.
· Arbitrage to move spot shipments to Asia-Pacific region from US or Europe stays hard to work.
· Closed arbitrage curbs competition from those other sources.
· Taiwan’s base oils exports hold firm in early-Aug 2024 after surging in July 2024.
· Singapore’s base oils exports rebound throughout July 2024 after slowdown in June 2024.
· Singapore’s base oils exports to India over last four weeks extend rise to highest since end-May 2024.
· Singapore’s Group I supplies likely to get boost following arrival in past week of cargoes from Italy, Saudi Arabia and Russia.
· South Korea’s base oils exports show signs of rebounding in July 2024, holding firm in early-Aug 2024.
· South Korea’s base oils exports to India show signs of rising sharply in July 2024 from previous month.
· South Korea’s base oils output falls in June 2024 from previous month, but much less sharply than slide in exports.
· Trend suggests exports fell more because refiners held back supplies than because of drop in output.
· Surplus of output over exports in June 2024 duly rises to highest in seven months.
· Trend leaves refiners with larger volume of supplies carried into Q3 2024 and larger volume to clear at a time when demand faces seasonal slowdown and margins remain firm.
· Trend puts pressure on refiners to boost exports in Q3 2024 to limit any further build-up of surplus supplies.
· Japan’s base oils output falls to four-month low in June 2024, keeping lower the volume of supply available for export.
· Japan’s base oils exports to southeast Asia fall more sharply than fall in shipments to South Korea.
· Trend magnifies impact on southeast Asia of drop in Japan’s base oils supply.
· Tighter European Group I supply and closed arbitrage from that market limits further southeast Asia’s supply options for Group I base oils.
· Trend incentivizes blenders in southeast Asia to switch to other base oils grades and minimize Group I requirements.
· India’s base oils supply slips to three-month low in June 2024, more because of sharp drop in imports than lower domestic output.
· Steady output suggests planned plant maintenance in India likely started later in June 2024 rather than in mid-month, with the impact felt more in July 2024.
· Asia’s premium-grade base oils imports from Qatar rebound in June 2024 to highest level this year.
· Strong flows to Asia are typically an indicator of higher-than-usual shipments from Qatar.
· A rise in shipments in June 2024 would follow a sharp fall in global imports from Qatar in first five months of 2024.
