Asia base oils supply outlook: Week of April 8

·        Asia’s base oils supply likely to improve amid signs of steady-to-higher shipments from northeast Asia, healthy availability in China.

·        Group I base oils supply could stay tighter if arbitrage from Europe closes and supplies from Japan stay lower.

·        Asia’s Group II price premium to gasoil stays well below year-earlier levels, curbing incentive for a more substantial rise in output.

·        Arbitrage from Asia to overseas markets like Europe and Americas improves but stays hard to work.

·        Limited arbitrage opportunities could trigger faster rise in surplus supplies in Asia if region is unable to absorb current volumes.

·        South Korea’s base oils exports show signs of rising in March 2024, with pick-up in flows to India and China.

·        Recovery in Taiwan’s base oils exports shows signs of extending into April 2024.

·        Thailand’s base oils exports should improve following completion of recent plant maintenance work and likely seasonal slowdown in domestic demand.

·        Singapore’s base oils exports stay unusually low in early April 2024 for a second week.

·        Slowdown likely keeps Singapore’s monthly exports lower than usual in March 2024 for a second month.

·        Drop in base oils exports could slow pace of any regional supply-build in Q2 2024.

·        China’s paraffinic base oils supply rises in March 2024 to second-highest level in 27 months.

·        Rising domestic production cuts further China’s requirements for overseas supplies, especially of Group II and Group III base oils.

·        China’s March Group I base oils output falls to seven-month low, with maintenance work on a key Group I unit starting at the end of last month.

·        Group I output could fall further in April 2024 while the unit remains offline for maintenance work.

·        China’s firm domestic Group I prices relative to diesel, relative to Group II prices and relative to FOB Asia prices suggest supply-demand fundamentals are already tight.

·        Japan’s February base oils output falls to 27-month low even with no plant maintenance.

·        Output falls as plant closures cut structural production capacity.

·        Japan’s February base oils supply stays unusually low even with rebound in imports.

·        Low supply leaves country focused on covering domestic requirements, curbs availability of supplies for export.

·        Low supply likely to support rising requirements for premium-grade imports, with South Korea and Qatar the key beneficiaries.

·        Thailand’s February base oils supply falls to fifteen-month low, limiting export volumes and compounding the drop in Japan’s base oils output.

·        Thailand’s base oils supply outpaces demand only because lower-than-usual exports cut total demand to a fifteen-month low.

·        Seasonal rise in domestic demand likely limited size of recovery in Thailand’s surplus supply in March 2024.

·        Singapore takes delivery of another cargo from Italy at end-March/early April 2024.

·        Shipments of Group I base oils from European sources like Italy help to cushion drop in availability in Asia-Pacific.

·        Shipments from Europe face prospect of slowing as surplus supply in that market tightens.