· Asia’s base oils demand shows signs of staying more muted amid still-squeezed arbitrage to China and India.· China’s demand shows signs of firming for certain grades, but stays at levels that limit requirements for supplies from overseas markets..· China’s domestic Group II base oils prices weaken relative to FOB NE Asia cargo prices in April 2024 even with drop in base oils production..· Lower prices and lower output suggest that domestic supply is still sufficient to meet demand.· Sufficient supply suggests that seasonal pick-up in demand was weak and buyers preferred to maintain low stocks.· Price weakness extends into May 2024, incentivizing regional refiners and domestic term buyers to redirect shipments to other markets instead..· Premium of domestic Group II N150 prices for imported supplies over prices for supplies from domestic producers rises to five-month high in early May 2024..· Surging premium could reflect tighter availability of imported supplies.· Surge in premium coincides with signs of slowdown in shipments from Taiwan to China in recent weeks.· Surge in premium boosts incentive for domestic buyers to procure more supplies from domestic producers when they have the flexibility to do so.· China’s domestic Group II heavy-grade premium to diesel prices holds firm; fall in heavy-grade premium to FOB NE Asia prices steadies after sustained slide since late-Feb 2024.· China’s domestic Group II heavy-grade premium to light grades rises to widest since late-Feb 2024.· Signs of firmer Group II heavy-grade price points to improvement in supply-demand fundamentals for the grade..· Singapore’s base oils exports to China rise over past four weeks to early May 2024; shipments to India stay high, while exports to southeast Asia stay lower..· Trend contrasts with firmer exports to southeast Asia and slowdown in shipments to China and India in May 2023 from previous month..· Seasonal pick-up in Asia’s lube consumption in March 2024 rises less than expected..· Smaller-than-expected rise in demand vs Feb 2024 likely leaves blenders with larger-than-expected base oils feedstock supplies at start of Q2 2024.· Larger feedstock supplies would curb buyers’ urgency to replenish stocks.· Smaller-than-expected rise in demand in March 2024 adds to attraction for buyers to maintain lower inventories amid uncertainty about outlook.· Lube demand in southeast Asia shows signs of turning more mixed..· Seasonal pick-up in Thailand’s lube demand in March 2024 from Feb 2024 is relatively small compared with year-earlier levels. .· Slower demand contrasts with sharp rise in Thailand’s domestic base oils production.· Contrast triggers surge in surplus of domestic base oils supply versus demand..· Domestic output likely held firm in April 2024, while demand likely faced a seasonal slowdown.· Rising surplus supply raises prospect of pick-up in exports to rebalance supply-demand fundamentals..· Philippines’ base oils and lube imports rise in March 2024 for second time in thirteen months from year-earlier levels, contrasting with slowdown in demand in Thailand.· Philippines’ imports from Thailand rise strongly in Q1 2024, almost matching shipments from South Korea and Singapore combined..· Trend points to still-firm demand for Group I base oils at a time when regional availability of the product is increasingly tight..· India’s Group II imported cargo price premium to FOB NE Asia prices stays narrow, especially for N150..· Narrow premium curbs attraction of moving more supplies to India.· Premium stays narrow even with less attractive arbitrage to move US shipments to India.· CFR India N150 premium to CFR India N70 prices rises to highest in almost a year.· Trend points to diverging incentives – firm base oils premium to regional gasoil prices incentivizes Asia refiners to maintain or raise output, especially for products with prices linked to gasoil, like N70.· Incentive to raise output coincides with narrowing CFR India premium to FOB NE Asia prices and FOB US Gulf coast export prices, pointing to weaker demand.· Singapore’s base oils exports to India rise so far in Q2 2024 even amid less workable arbitrage from Asia to India in recent weeks.· Trend suggests shipments consist mostly of term supplies.· Any more prolonged extension of pick-up in flows from Singapore to India suggests the shipments are in place of supplies from other sources..· India’s April lube demand falls to one-year low on seasonal slowdown at start of new financial year..· Lube demand rises in April 2024 year on year amid surging auto sales, firm industrial activity.· Pick-up in India’s lube demand follows contraction in Q1 2024, boosts incentive for blenders to maintain larger feedstock inventories, and speeds up their need to replenish stocks.· India’s firmer lube demand could have waning impact on demand for overseas base oils supplies as swathe of new base oils production capacity starts to come online from start of Q3 2024..· Pakistan’s demand for base oils imports could hold firm amid persistently-low domestic production, rising consumption of premium-grade base oils and prospect of steady-to-firm lube consumption..· Pakistan’s growing import requirements boost its importance for Singapore and South Korea in face of China’s waning import requirements and India’s rising base oils production capacity.· South Korea remains Pakistan’s largest base oils supplier in first two months of 2024..· Its share of imports falls from 2023 amid pick-up in flows from Singapore..Global base oils demand outlook: Week of 6 May
· Asia’s base oils demand shows signs of staying more muted amid still-squeezed arbitrage to China and India.· China’s demand shows signs of firming for certain grades, but stays at levels that limit requirements for supplies from overseas markets..· China’s domestic Group II base oils prices weaken relative to FOB NE Asia cargo prices in April 2024 even with drop in base oils production..· Lower prices and lower output suggest that domestic supply is still sufficient to meet demand.· Sufficient supply suggests that seasonal pick-up in demand was weak and buyers preferred to maintain low stocks.· Price weakness extends into May 2024, incentivizing regional refiners and domestic term buyers to redirect shipments to other markets instead..· Premium of domestic Group II N150 prices for imported supplies over prices for supplies from domestic producers rises to five-month high in early May 2024..· Surging premium could reflect tighter availability of imported supplies.· Surge in premium coincides with signs of slowdown in shipments from Taiwan to China in recent weeks.· Surge in premium boosts incentive for domestic buyers to procure more supplies from domestic producers when they have the flexibility to do so.· China’s domestic Group II heavy-grade premium to diesel prices holds firm; fall in heavy-grade premium to FOB NE Asia prices steadies after sustained slide since late-Feb 2024.· China’s domestic Group II heavy-grade premium to light grades rises to widest since late-Feb 2024.· Signs of firmer Group II heavy-grade price points to improvement in supply-demand fundamentals for the grade..· Singapore’s base oils exports to China rise over past four weeks to early May 2024; shipments to India stay high, while exports to southeast Asia stay lower..· Trend contrasts with firmer exports to southeast Asia and slowdown in shipments to China and India in May 2023 from previous month..· Seasonal pick-up in Asia’s lube consumption in March 2024 rises less than expected..· Smaller-than-expected rise in demand vs Feb 2024 likely leaves blenders with larger-than-expected base oils feedstock supplies at start of Q2 2024.· Larger feedstock supplies would curb buyers’ urgency to replenish stocks.· Smaller-than-expected rise in demand in March 2024 adds to attraction for buyers to maintain lower inventories amid uncertainty about outlook.· Lube demand in southeast Asia shows signs of turning more mixed..· Seasonal pick-up in Thailand’s lube demand in March 2024 from Feb 2024 is relatively small compared with year-earlier levels. .· Slower demand contrasts with sharp rise in Thailand’s domestic base oils production.· Contrast triggers surge in surplus of domestic base oils supply versus demand..· Domestic output likely held firm in April 2024, while demand likely faced a seasonal slowdown.· Rising surplus supply raises prospect of pick-up in exports to rebalance supply-demand fundamentals..· Philippines’ base oils and lube imports rise in March 2024 for second time in thirteen months from year-earlier levels, contrasting with slowdown in demand in Thailand.· Philippines’ imports from Thailand rise strongly in Q1 2024, almost matching shipments from South Korea and Singapore combined..· Trend points to still-firm demand for Group I base oils at a time when regional availability of the product is increasingly tight..· India’s Group II imported cargo price premium to FOB NE Asia prices stays narrow, especially for N150..· Narrow premium curbs attraction of moving more supplies to India.· Premium stays narrow even with less attractive arbitrage to move US shipments to India.· CFR India N150 premium to CFR India N70 prices rises to highest in almost a year.· Trend points to diverging incentives – firm base oils premium to regional gasoil prices incentivizes Asia refiners to maintain or raise output, especially for products with prices linked to gasoil, like N70.· Incentive to raise output coincides with narrowing CFR India premium to FOB NE Asia prices and FOB US Gulf coast export prices, pointing to weaker demand.· Singapore’s base oils exports to India rise so far in Q2 2024 even amid less workable arbitrage from Asia to India in recent weeks.· Trend suggests shipments consist mostly of term supplies.· Any more prolonged extension of pick-up in flows from Singapore to India suggests the shipments are in place of supplies from other sources..· India’s April lube demand falls to one-year low on seasonal slowdown at start of new financial year..· Lube demand rises in April 2024 year on year amid surging auto sales, firm industrial activity.· Pick-up in India’s lube demand follows contraction in Q1 2024, boosts incentive for blenders to maintain larger feedstock inventories, and speeds up their need to replenish stocks.· India’s firmer lube demand could have waning impact on demand for overseas base oils supplies as swathe of new base oils production capacity starts to come online from start of Q3 2024..· Pakistan’s demand for base oils imports could hold firm amid persistently-low domestic production, rising consumption of premium-grade base oils and prospect of steady-to-firm lube consumption..· Pakistan’s growing import requirements boost its importance for Singapore and South Korea in face of China’s waning import requirements and India’s rising base oils production capacity.· South Korea remains Pakistan’s largest base oils supplier in first two months of 2024..· Its share of imports falls from 2023 amid pick-up in flows from Singapore..Global base oils demand outlook: Week of 6 May
