· Asia’s base oils demand shows signs of seasonal slowdown.· Closed arbitrage to growing number of outlets coincides with increasingly firm base oils margins that incentivize refiners to raise output.· Weak demand and prospect of rise in surplus supply could put pressure on prices.· Concern about downward price pressure could add to slowdown in demand..· China’s base oils demand shows signs of extending slowdown.· China’s domestic Group II light-grade premium to Shandong diesel prices extends fall even with scheduled plant-maintenance in the country in June 2024 and closed arbitrage to import regional supplies.· China’s domestic Group II heavy-grade premium to Shandong diesel prices extends rise.· China’s domestic Group II heavy-grade premium to light-grade base oils extends rise to highest in more than two years..· Rising Group II heavy-grade premium points to firmer fundamentals for the product.· China’s demand for Group II heavy-grade base oils from Taiwan could hold firmer than for light grades, even with upcoming additional tariff cost, amid more limited supply from domestic producers.· Firmer demand for heavy grades would give supplies from Taiwan more leverage to pass on higher cost to buyers.· Main challenge for heavy-grade supplies from Taiwan to China would be shipments from South Korea, for which China’s import tariff is lower..· China’s domestic Group I brightstock premium to FOB Asia cargo prices holds close to lowest in more than four months..· China’s lower brightstock premium, and firmer brightstock premium in other markets like India and Europe, could incentivize Asia’s refiners to redirect more shipments to those other markets..· Singapore’s base oils exports to southeast Asia extend rebound over last four weeks to highest four-week volume in almost nine months..· Exports to southeast Asia rise on surge in shipments to Indonesia, following sustained slowdown in flows to the region over previous two months.· A sustained pick-up in shipments to southeast Asia would help to balance out prospect of seasonal slowdown in flows to China and India..· CFR India Group II prices stay unusually weak relative to FOB NE Asia cargo prices, keeping arbitrage shut.· Closed arbitrage to India puts pressure on Asia’s refiners to target more distant markets like Americas or Europe.· Closed arbitrage follows higher-than-usual flow of shipments to India in April and May 2024, boosting importers’ stocks.· Signs of price-weakness and weaker supply-demand fundamentals in Asia-Pacific market incentivize India’s blenders to trim stocks at current, higher price levels.· India’s Group I brightstock price holds firm relative to FOB Asia prices, contrasts with weaker China brightstock prices relative to FOB Asia prices..· Firmer India brightstock price boosts attraction of moving more Asia cargoes to that market rather than to China..Asia base oils demand outlook: Week of 3 June
· Asia’s base oils demand shows signs of seasonal slowdown.· Closed arbitrage to growing number of outlets coincides with increasingly firm base oils margins that incentivize refiners to raise output.· Weak demand and prospect of rise in surplus supply could put pressure on prices.· Concern about downward price pressure could add to slowdown in demand..· China’s base oils demand shows signs of extending slowdown.· China’s domestic Group II light-grade premium to Shandong diesel prices extends fall even with scheduled plant-maintenance in the country in June 2024 and closed arbitrage to import regional supplies.· China’s domestic Group II heavy-grade premium to Shandong diesel prices extends rise.· China’s domestic Group II heavy-grade premium to light-grade base oils extends rise to highest in more than two years..· Rising Group II heavy-grade premium points to firmer fundamentals for the product.· China’s demand for Group II heavy-grade base oils from Taiwan could hold firmer than for light grades, even with upcoming additional tariff cost, amid more limited supply from domestic producers.· Firmer demand for heavy grades would give supplies from Taiwan more leverage to pass on higher cost to buyers.· Main challenge for heavy-grade supplies from Taiwan to China would be shipments from South Korea, for which China’s import tariff is lower..· China’s domestic Group I brightstock premium to FOB Asia cargo prices holds close to lowest in more than four months..· China’s lower brightstock premium, and firmer brightstock premium in other markets like India and Europe, could incentivize Asia’s refiners to redirect more shipments to those other markets..· Singapore’s base oils exports to southeast Asia extend rebound over last four weeks to highest four-week volume in almost nine months..· Exports to southeast Asia rise on surge in shipments to Indonesia, following sustained slowdown in flows to the region over previous two months.· A sustained pick-up in shipments to southeast Asia would help to balance out prospect of seasonal slowdown in flows to China and India..· CFR India Group II prices stay unusually weak relative to FOB NE Asia cargo prices, keeping arbitrage shut.· Closed arbitrage to India puts pressure on Asia’s refiners to target more distant markets like Americas or Europe.· Closed arbitrage follows higher-than-usual flow of shipments to India in April and May 2024, boosting importers’ stocks.· Signs of price-weakness and weaker supply-demand fundamentals in Asia-Pacific market incentivize India’s blenders to trim stocks at current, higher price levels.· India’s Group I brightstock price holds firm relative to FOB Asia prices, contrasts with weaker China brightstock prices relative to FOB Asia prices..· Firmer India brightstock price boosts attraction of moving more Asia cargoes to that market rather than to China..Asia base oils demand outlook: Week of 3 June
