Asia base oils – week of Apr 10: Demand outlook

·        China’s mixed economic recovery raises prospect of more gradual pick-up in base oils demand.

·        China’s car sales show signs of improving in 2H March vs 1H March.

·        China’s more gradual pick-up in base oils demand incentivizes regional refiners to continue to focus on sales to other markets and to manage expectations for China.

·        Steady base oils flows to other markets like India suggest regional refiners are following such a strategy, reinforcing signs of muted recovery in Chinese demand.  

·        Singapore’s base oils shipments in recent weeks show rise in supplies to markets like southeast Asia and drop in supplies to China.

·        Thailand’s surge in base oil exports to China in February likely consisted mostly of bright stock.

·        Rise in supplies from sources like Thailand, and weaker domestic bright stock price in China, suggests country’s requirements are covered for now.

·        Taiwan likely to need to line up alternative sources of Group I supplies amid signs of slowdown in shipments from Japan.

·        Drop in shipments from Japan to markets like Taiwan likely to become more frequent as its domestic output falls.

·        Blenders in southeast Asia likely to face little urgency to procure additional supplies amid healthy stock levels and expectations that supply to remain readily available.

·        India pauses on additional interest-rate increases – adding to signs of more widespread regional pause in rate increases.

·        India’s March car sales rise for eighth month.

·        India’s car sales growth forecast to slow sharply over coming financial year starting in April as higher prices and regulatory changes curb demand.

·        India’s March base oils imports show signs of staying at low levels, at time of year when lube demand typically peaks.

·        India’s demand for very-light grades likely to hold steady amid expectations prices will hold steady or rise, and amid still-wide retail diesel premium to light-grade prices.