· Lower outright crude and diesel prices could boost attraction of producing more base oils if prices maintain current levels.· Any incentive to raise supply in coming weeks would coincide with slowing demand in China, Europe and US.· Trend would boost importance of markets like southeast Asia, India and Mideast Gulf to absorb more supplies.· Group I/II plant maintenance work in region in Q4 2023 likely to cushion impact of pick-up in South Korean supplies..· South Korea’s August base oils output already recovers to three-month high even when base oils margins were unusually weak.· South Korea’s August base oils output as share of country's refined products output rises to highest in fifteen months..· Rebound in output coincides with fall in Asia base oils prices to steep discount to regional diesel prices, ICIS data shows.· Rebound in output boosts regional supply, complicates regional refiners’ leverage to target higher prices in response to weak margins as they seek outlets for supplies.· Rebound in output boosts importance of keeping shut the arbitrage from US to markets like India..· Japan’s August base oils output falls to six-month low even before start of scheduled plant maintenance work in September..· Base oils output faces prospect of falling further over coming months because of maintenance work and plant closure.· Asia’s Group I base oils prices stay weak relative to diesel in Q3 2023 even with fall in Japan’s output.· Trend suggests market yet to feel impact of drop in supply or that seasonal slowdown in demand balanced out the drop in supply.· Market likely to reflect more the drop in supply when demand is firmer..· Thailand’s August base oils output holds firm despite seasonal slowdown in regional demand and weak regional prices..· Steady base oils output contrasts with falling base oils production in Japan.· Prospect of further drop in supply from Japan set to increase region’s reliance on Group I supplies from Thailand and increase impact of any unexpected changes in its supplies..· Thailand’s base oils supply lags demand in August for first time in four months on pick-up in domestic demand, steady arbitrage shipments..· Thailand’s lower stocks and prospect of firmer domestic demand could curb refiners’ need to clear large volumes of supplies at prices that make arbitrage feasible to outlets like India..Global base oils - week of Oct 9: Price outlook - arbitrage
· Lower outright crude and diesel prices could boost attraction of producing more base oils if prices maintain current levels.· Any incentive to raise supply in coming weeks would coincide with slowing demand in China, Europe and US.· Trend would boost importance of markets like southeast Asia, India and Mideast Gulf to absorb more supplies.· Group I/II plant maintenance work in region in Q4 2023 likely to cushion impact of pick-up in South Korean supplies..· South Korea’s August base oils output already recovers to three-month high even when base oils margins were unusually weak.· South Korea’s August base oils output as share of country's refined products output rises to highest in fifteen months..· Rebound in output coincides with fall in Asia base oils prices to steep discount to regional diesel prices, ICIS data shows.· Rebound in output boosts regional supply, complicates regional refiners’ leverage to target higher prices in response to weak margins as they seek outlets for supplies.· Rebound in output boosts importance of keeping shut the arbitrage from US to markets like India..· Japan’s August base oils output falls to six-month low even before start of scheduled plant maintenance work in September..· Base oils output faces prospect of falling further over coming months because of maintenance work and plant closure.· Asia’s Group I base oils prices stay weak relative to diesel in Q3 2023 even with fall in Japan’s output.· Trend suggests market yet to feel impact of drop in supply or that seasonal slowdown in demand balanced out the drop in supply.· Market likely to reflect more the drop in supply when demand is firmer..· Thailand’s August base oils output holds firm despite seasonal slowdown in regional demand and weak regional prices..· Steady base oils output contrasts with falling base oils production in Japan.· Prospect of further drop in supply from Japan set to increase region’s reliance on Group I supplies from Thailand and increase impact of any unexpected changes in its supplies..· Thailand’s base oils supply lags demand in August for first time in four months on pick-up in domestic demand, steady arbitrage shipments..· Thailand’s lower stocks and prospect of firmer domestic demand could curb refiners’ need to clear large volumes of supplies at prices that make arbitrage feasible to outlets like India..Global base oils - week of Oct 9: Price outlook - arbitrage
