Asia base oils - week of Feb 19: Demand outlook

·        Asia’s base oils demand likely to hold firm amid balanced supplies and steady prices ahead of seasonal rise in lube consumption.

·        China’s base oil demand could start to revive as activity gradually resumes after week-long public holiday.

·        Chinese buyers’ cautious stock-building ahead of lunar new year holidays would require more rapid replenishment if seasonal pick-up in demand exceeds low expectations.

·        Singapore’s base oils exports to China stay similar to year-earlier levels so far this year.

·        Last year’s exports to China surged in following weeks through March 2023 before sliding from April 2023.

·        Prospect of steadier exports this year would coincide with China’s higher domestic supply, curbing risk of major supply-build.

·        Taiwan’s January base oils exports to China rise to ten-month high as buyers replenish depleted inventories before lunar new year holidays.

·        Domestic price for China’s imported Group II supplies stays at narrower premium to prices for domestic supplies so far in 2024.

·        Narrower premium suggests slowdown in Taiwan’s base oils exports in late-Jan/early Feb 2024 has muted impact on China market.

·        Muted impact on China market suggests domestic buyers are comfortable with avoiding major supply-build ahead of spring oil-change season, when demand typically rises.

·        Asia’s December lube demand rises for seventh time in eight months.

·        Firm demand provides valuable outlets for region’s refiners, curbs size of base oils supply-build at year-end.

·        Lube demand in Dec 2023 rises in southeast Asia, falls in northeast Asia.

·        Trend highlights attraction of supplying a region with diverse growth dynamics.

·        Philippines’ December base oils/lube imports fall at slowest pace in seven months.

·        Any extension of that trend would provide additional support for base oils demand in southeast Asia.

·        Philippines December base oils/lube imports from South Korea rise for seventh time in eight months, supporting surge in imports in 2023.

·        Philippines’ December imports from Singapore fall for eighth month, triggering slump in imports in 2023.

·        Trend highlights importance of key outlets in southeast Asia and growing competition between Singapore and South Korea for rising market share of those outlets.

·        South Korea’s January base oils exports to southeast Asia rise to eleven-month high; shipments to northeast Asia fall to five-month low.

·        Diverging trade flows follow rise in China’s January base oils output to two-year high, highlight growing importance of southeast Asian market.

·        India’s January lube demand falls 8pc yoy, holds in narrow range for sixth month.

·        More muted demand coincides with rising supply in Q4 2023 and signs of still-firm supply in Jan 2024.

·        Diverging supply-demand trends curb blenders’ urgency to secure additional base oils supplies, give them more leverage to target competitive prices.

·        India’s base oils demand could still get a boost if blenders expect prices to rise in coming months.

·        Signs of healthy availability of supplies could delay any such price-gains, curbing attraction of locking in additional supplies.

·        Signs of still-healthy availability of supplies from sources like US cushion impact of any slowdown in shipments from Saudi Arabia.

·        India’s base oils demand shows signs of holding firmer for certain grades for which supply is tighter.