· Asia’s base oils supply shows signs of tightening in the face of plant shutdowns, run-cuts and complicated arbitrage flows.· Asia’s Group I supply shows signs of growing tightness as plant maintenance, lower production and lower regional exports cut availability.· Tighter Group I supply coincides with seasonal rise in demand throughout Asia-Pacific region.· Asia’s ex-tank Group I SN 500/bright stock price premium to fob Europe prices increases to widest in close to a year.· Widening premium boosts attraction of eyeing cargoes from other markets like Mideast Gulf and Europe to move to Asia.· High freight costs and logistical difficulties of shipments from Mideast Gulf or Europe could complicate any such arbitrage shipments.· Asia’s Group II supply likely to be lower than expected as unplanned production issues in Taiwan slow down pace of exports from that market.· Lower Group II base oils margins add to incentive for other regional refiners to maintain or extend run-cuts.· Asia’s Group III base oils supply likely to tighten because of planned plant maintenance work in southeast and northeast Asia during Q1 2024..· China is an outlier - its base oils supply shows signs of rising in early 2024 on higher output and imports.· Trend could curb its requirements for additional supplies from regional refiners.· Thailand’s December base oils output falls to thirteen-month low..· Output likely to extend slide in Jan 2024 and Feb 2024 because of scheduled and unplanned plant maintenance work.· Subsequent drop in Group I base oils supply compounds regional tightness.· Timing of drop in supply coincides with seasonal rise in demand, magnifying impact of the tightness..· Japan’s December base oils output falls for ninth month year on year..· Japan’s December base oils exports duly fall to second-lowest since 2012, with slump in shipments to South Korea and Singapore.· Drop in shipments forces those countries to line up supplies from other sources to cover the shortfall..· Singapore’s base oils exports show signs of recovering in Jan 2024 from previous month but stay relatively low compared with previous five months to Nov 2023.· Singapore’s base oils imports from China could be higher than expected in Jan 2024 amid signs of pick-up in shipments using different import code.· Trend began during final months of 2023..· India’s December base oils supply stays higher than usual for a second month, exceeds demand for third month..· India’s persistent supply surplus adds to blenders’ stocks, curbing urgency to secure additional supplies of certain grades.· Higher surplus eases impact of any slowdown in shipments of very light grades from Saudi Arabia.· Rising CFR India prices for some grades point to more limited surplus of those grades amid moves to lock in additional supplies.· Rising CFR India prices for some grades boosts value of existing inventories of those grades..Asia base oils - week of Feb 5: Demand outlook.Global base oils - week of Feb 5: Demand outlook.Global base oils - week of Feb 5: Price outlook - arbitrage
