· China’s Shandong diesel premium to crude extends rebound to highest since May..· India’s retail diesel premium to crude oil falls to lowest since November 2022, stays high.· China's firm diesel premiums contrast with weak base oils values vs diesel and crude oil.· Trend incentivizes refiners to focus on diesel output, cut base oils output.· China’s base oils output shows signs of falling in July amid unexpected/extended plant maintenance and run-cuts.· Price dynamics incentivize China’s refiners to maintain similar output strategy in August.· Recovery in South Korea’s base oils supplies could take longer than expected following maintenance work amid signs of firm domestic demand, steeper-than-expected fall in output in late Q2 2023.· Japan’s June base oils output stays unusually firm even amid round of plant maintenance work throughout Q2 2023..· Firm output coincides with and helps to sustain high volume of shipments to Singapore for more than a year..· That dynamic will change in coming months following closure of another Group I base oils unit in Japan.· Plant closure will cut Japan’s base oils output and likely impact exports to Singapore especially.· Singapore would then need to line up alternative sources to cover for loss of those supplies..· Japan’s export to some Asia-Pacific markets like Thailand and Hong Kong already fell sharply in recent months amid drop in structural supply..· Markets like Thailand could curb their own Group I base oils exports in response to drop in supplies from Japan.· Drop in Group I supply in Asia-Pacific set to leave producers like Thailand and Singapore with more outlets for their own exports.· Drop in Japan’s Group I exports to southeast Asia could trigger supply response from Singapore, whose exports remain much lower than pre-2020 levels..· Thailand moves wave of shipments to India, Mideast Gulf and Europe in June 2023..· Wave of arbitrage shipments takes advantage of Europe’s high prices and tight supply, helps Thailand to avoid supply-build ahead of seasonal slowdown in Q3 2023.· Wave of arbitrage shipments contrasts with dearth of shipments from Thailand to China in Q2 2023.· Trend highlights growing opportunities in other markets and benefit of limiting exposure to China market.· Trend highlights global impact of Europe’s structural fall in Group I base oils supply..Global base oils - week of Aug 7: Price outlook - margins
· China’s Shandong diesel premium to crude extends rebound to highest since May..· India’s retail diesel premium to crude oil falls to lowest since November 2022, stays high.· China's firm diesel premiums contrast with weak base oils values vs diesel and crude oil.· Trend incentivizes refiners to focus on diesel output, cut base oils output.· China’s base oils output shows signs of falling in July amid unexpected/extended plant maintenance and run-cuts.· Price dynamics incentivize China’s refiners to maintain similar output strategy in August.· Recovery in South Korea’s base oils supplies could take longer than expected following maintenance work amid signs of firm domestic demand, steeper-than-expected fall in output in late Q2 2023.· Japan’s June base oils output stays unusually firm even amid round of plant maintenance work throughout Q2 2023..· Firm output coincides with and helps to sustain high volume of shipments to Singapore for more than a year..· That dynamic will change in coming months following closure of another Group I base oils unit in Japan.· Plant closure will cut Japan’s base oils output and likely impact exports to Singapore especially.· Singapore would then need to line up alternative sources to cover for loss of those supplies..· Japan’s export to some Asia-Pacific markets like Thailand and Hong Kong already fell sharply in recent months amid drop in structural supply..· Markets like Thailand could curb their own Group I base oils exports in response to drop in supplies from Japan.· Drop in Group I supply in Asia-Pacific set to leave producers like Thailand and Singapore with more outlets for their own exports.· Drop in Japan’s Group I exports to southeast Asia could trigger supply response from Singapore, whose exports remain much lower than pre-2020 levels..· Thailand moves wave of shipments to India, Mideast Gulf and Europe in June 2023..· Wave of arbitrage shipments takes advantage of Europe’s high prices and tight supply, helps Thailand to avoid supply-build ahead of seasonal slowdown in Q3 2023.· Wave of arbitrage shipments contrasts with dearth of shipments from Thailand to China in Q2 2023.· Trend highlights growing opportunities in other markets and benefit of limiting exposure to China market.· Trend highlights global impact of Europe’s structural fall in Group I base oils supply..Global base oils - week of Aug 7: Price outlook - margins