· Asia’s base oils prices extend sharp fall versus feedstock/competing fuel prices since early-June 2024.· Lower margins and seasonal slowdown in demand could incentivize regional refiners to adjust output at start of Q3 2024, curbing prospect or size of any supply-build.· Size of surplus shows signs of staying lower than usual in Q2 2024.· Base oils exports in recent weeks show mixed signals, with slowdown from Singapore, and rise in shipments from Taiwan.· Wider discount of FOB NE Asia Group II prices to US prices could boost arbitrage flows to the Americas market.· Concern about weather-related supply disruptions in US could add to such moves.· Any such flows would trim regional supply.· China’s Group II supply likely to stay tighter at start of Q3 2024 because of ongoing maintenance work.· Signs of slowdown in shipments from Singapore and Taiwan to China in June 2024 would add to country’s tighter supply.· Tighter supply could boost feasibility of more arbitrage shipments to China, especially for heavy grades.· That trend could become more marked in a few weeks’ time, when blenders start to prepare for seasonal pick-up in demand at end of Q3.· Singapore’s June base oils exports show signs of falling sharply from May 2024.· Drop in supply raises prospect of limiting regional supply surplus at end of Q2 2024.· Rise in Singapore’s imports from Saudi Arabia at end-June/early July 2024 could include additional supplies of brightstock..· South Korea’s base oils exports show signs of slipping in June 2024 from previous month.· Any slowdown could point to lower base oils output or a rise in the country’s stocks.· South Korea’s base oils output rebounds in May 2024, with similar rise in exports likely leaving supply relatively balanced at least to end-May 2024..· Balanced supplies give refiners option of adjusting output or prices, or a combination of both, in response to seasonal slowdown in demand at end-Q2/early Q3 2024..· Japan’s May base oils supply falls to three-month low on dip in output and imports..· Japan’s strong domestic demand cuts further the volume of supplies available for export..· Thailand’s base oils imports account for growing share of country’s supply in first five months of 2024 as rise in shipments balances out fall in domestic production..· Extension of trend could free up more Group I base oils supplies from domestic refiners for export market.· Extension of trend increases importance of Thailand as key outlet for premium-grade base oils.· Rising importance of Thailand as key outlet likely to increase competition between Singapore and South Korea for larger share of its market.· Singapore’s share of Thailand’s base oils imports rises to more than 36% in first five months of 2024, up from 33% in 2023, while South Korea’s share shrinks..· China’s paraffinic base oils output falls to seven-month low in June 2024 on slide in Group II production..· Ongoing plant maintenance likely to extend slowdown in Group II output through July 2024.· China’s Group I base oils output rises to four-month high in June 2024.· China’s domestic Group I heavy-neutrals prices weaken versus domestic and FOB NE Asia Group II prices through June 2024, suggesting higher output is starting to ease recent supply tightness.· Domestic prices would need to ease further relative to FOB NE Asia prices to boost the attraction of exports.· China’s Group III base oils output rises to multi-year high in June 2024.· China’s domestic Group III prices maintain steep premium to prices in other regions, suggesting supply is still insufficient to meet demand..Asia base oils demand outlook: Week of 8 July.China’s June base oils output falls.Thailand’s May base oils supply rises.S Korea’s May base oils output recovers
· Asia’s base oils prices extend sharp fall versus feedstock/competing fuel prices since early-June 2024.· Lower margins and seasonal slowdown in demand could incentivize regional refiners to adjust output at start of Q3 2024, curbing prospect or size of any supply-build.· Size of surplus shows signs of staying lower than usual in Q2 2024.· Base oils exports in recent weeks show mixed signals, with slowdown from Singapore, and rise in shipments from Taiwan.· Wider discount of FOB NE Asia Group II prices to US prices could boost arbitrage flows to the Americas market.· Concern about weather-related supply disruptions in US could add to such moves.· Any such flows would trim regional supply.· China’s Group II supply likely to stay tighter at start of Q3 2024 because of ongoing maintenance work.· Signs of slowdown in shipments from Singapore and Taiwan to China in June 2024 would add to country’s tighter supply.· Tighter supply could boost feasibility of more arbitrage shipments to China, especially for heavy grades.· That trend could become more marked in a few weeks’ time, when blenders start to prepare for seasonal pick-up in demand at end of Q3.· Singapore’s June base oils exports show signs of falling sharply from May 2024.· Drop in supply raises prospect of limiting regional supply surplus at end of Q2 2024.· Rise in Singapore’s imports from Saudi Arabia at end-June/early July 2024 could include additional supplies of brightstock..· South Korea’s base oils exports show signs of slipping in June 2024 from previous month.· Any slowdown could point to lower base oils output or a rise in the country’s stocks.· South Korea’s base oils output rebounds in May 2024, with similar rise in exports likely leaving supply relatively balanced at least to end-May 2024..· Balanced supplies give refiners option of adjusting output or prices, or a combination of both, in response to seasonal slowdown in demand at end-Q2/early Q3 2024..· Japan’s May base oils supply falls to three-month low on dip in output and imports..· Japan’s strong domestic demand cuts further the volume of supplies available for export..· Thailand’s base oils imports account for growing share of country’s supply in first five months of 2024 as rise in shipments balances out fall in domestic production..· Extension of trend could free up more Group I base oils supplies from domestic refiners for export market.· Extension of trend increases importance of Thailand as key outlet for premium-grade base oils.· Rising importance of Thailand as key outlet likely to increase competition between Singapore and South Korea for larger share of its market.· Singapore’s share of Thailand’s base oils imports rises to more than 36% in first five months of 2024, up from 33% in 2023, while South Korea’s share shrinks..· China’s paraffinic base oils output falls to seven-month low in June 2024 on slide in Group II production..· Ongoing plant maintenance likely to extend slowdown in Group II output through July 2024.· China’s Group I base oils output rises to four-month high in June 2024.· China’s domestic Group I heavy-neutrals prices weaken versus domestic and FOB NE Asia Group II prices through June 2024, suggesting higher output is starting to ease recent supply tightness.· Domestic prices would need to ease further relative to FOB NE Asia prices to boost the attraction of exports.· China’s Group III base oils output rises to multi-year high in June 2024.· China’s domestic Group III prices maintain steep premium to prices in other regions, suggesting supply is still insufficient to meet demand..Asia base oils demand outlook: Week of 8 July.China’s June base oils output falls.Thailand’s May base oils supply rises.S Korea’s May base oils output recovers