· Asia’s base oils demand shows signs of steady-to-firm buying interest in China and India, more muted buying interest in southeast Asia.· Signs of firm Chinese demand could cushion impact of rising Group II supply from Taiwan, ease concern about possibility of regional supply-build.· Asia’s Group II prices extend slide vs Group I prices, adding to incentive for blenders to consume more Group II supplies.· Asia’s Group II export prices fall vs feedstock/competing fuel prices, incentivizing refiners to cut surplus supply.· China’s domestic Group II light-grade price premium to fob Asia prices extends rise to highest in more than five months.· Rising domestic price premium boosts feasibility of moving arbitrage shipments to China, even at a time of healthy availability of domestic supplies.· Prices at levels that boost feasibility of arbitrage point to sufficient demand to absorb the supplies or raise prospect of large supply-build.· China’s domestic Group I bright stock price premium to fob Asia prices holds firm in narrow range since late Oct 2023.· Premium holds at level that sustains feasibility of attracting more arbitrage shipments to China..· Singapore’s weekly base oils exports to China surge, while imports from China extend slide over last four weeks..· Trend could point to moves to ship more supplies to China before market activity slows during lunar new year holidays in Feb 2024.· Trend could also point to firmer demand and blenders’ moves to build stocks ahead of expected seasonal rise in demand after lunar new year holidays.· Sustained slowdown in Singapore base oils imports from China adds to signs of tighter surplus availability, despite rise in China’s domestic production. .· Asia’s November lube demand holds steady yoy as firmer consumption in India counters weaker demand in northeast Asia and southeast Asia..· India’s rising lube demand highlights importance of country as key outlet for regional base oils supplies relative to other markets.· Trend highlights large impact of any slowdown in India’s base oils demand for overseas supplies even if its domestic lube demand continues to rise.· Such a scenario is more likely to materialize when new base oils production capacity starts up in the coming months..· Vietnam’s November base oils imports hold firm, with Singapore and South Korea accounting for more than 90pc of country’s supplies..· Vietnam’s steadier base oils imports in Nov 2023 point to signs of slowdown in pace of recovery in southeast Asia’s demand.· South Korea remains Vietnam’s largest source of overseas base oils in Jan-Nov 2023, displacing Singapore.· Competition likely to intensify for southeast Asian markets like Vietnam as Asia’s refiners seek alternative outlets and cut reliance on markets like China.· Prospect of slowdown in India’s requirements for base oils imports this year would add to importance of southeast Asia as key outlet for regional supplies..· Singapore’s base oils exports to Indonesia over last four weeks combined fall to lowest since Q2 2023..· Slowdown follows unusually large shipments to Indonesia in second-half 2023.· Slowdown in shipments could reflect focus on prioritising Chinese market at start of the year..· Philippines' November lube/base oils imports fall for ninth month, adding to downward pressure on regional demand..· South Korea accounts for larger share of Philippines’ base oils/lube imports than Singapore in Jan-Nov 2023, mirroring similar trend to Vietnam..· India’s automobile sales forecast to extend rise in 2024 following 11pc growth in 2023.· India’s December lube demand rises for seventh time in eight months; demand rises 5pc in 2023..· Prospect of further rise in India’s rising lube demand likely to benefit overseas base oils refiners until new base oils production capacity starts up in the country.· The new units are set to cover more of India’s domestic requirements, curbing country’s requirements for supplies from overseas markets..· Rebound in India’s Group II base oils premium to fob Asia prices makes arbitrage more feasible, especially for heavy grades.· Rebound in premium coincides with signs of slowdown in shipments from Saudi Arabia to India in recent weeks..Global base oils - week of Jan 15: Price outlook - margins.Global base oils - week of Jan 15: Price outlook - arbitrage.Global base oils - week of Jan 15: Demand outlook
