· Asia’s base oils demand likely to slow down following further slide in feedstock and diesel prices.· Lower feedstock/diesel prices raise expectations of lower base oils prices.· Expectations of lower base oils prices incentivize buyers to hold back.· Less feasible arbitrage to outlets like China and India add to signs of more muted demand..· China’s demand for supplies from regular overseas suppliers point to steady flows at lower levels, after signs of slowdown in shipments in April 2024 from the previous month.· Large share of the supplies bound for China likely consist of term volumes.· Domestic buyers face growing incentive to redirect term volumes to other overseas markets as domestic Chinese Group II prices extend weakness versus FOB NE Asia prices to lowest in almost five months.· China’s domestic Group I brightstock price premium to FOB Asia prices shows signs of having plateaued.· Brightstock premium stays unusually high, still falls to lowest in more than two months..· Any slowdown in China’s demand for brightstock could boost availability of the product for other outlets like southeast Asia or India.· Asia’s lower Group I production capacity means any price-weakness would be driven more by weaker demand than rise in supply.· FOB NE Asia Group II N500 premium to Group I SN 500 rises to highest since Sept 2023.· Rising premium boosts incentive for blenders to use more SN 500.· Tight availability of Group I SN 500 limits blenders' leverage to pursue any such move. .· Singapore’s base oils exports to China show signs of improving in April 2024 from previous month but stay lower than usual.· Singapore’s exports to China slow sharply in H2 April 2024, mirroring similar trend with shipments from Taiwan to China..· Japan’s March domestic base oils/lube demand rises to four-month high, adding to widespread seasonal pick-up in consumption in Asia in the month of March.· Japan’s domestic lube demand could rise more strongly than usual in Q2 2024 amid an expected recovery in the country’s automobile production.· Any further rise in Japan’s domestic demand could consume more of the country’s base oils supply, curbing further the volume of Group I supplies available for export..· Trend would exacerbate Asia-Pacific region’s tight supply of Group I base oils..· Vietnam’s March base oils imports rise to five-month high, outpace year-earlier levels and add to regionwide trend of firmer consumption in the month of March.· Vietnam’s base oils imports still fall in Q1 2024 to lowest in more than a year..· Drop in imports coincides with slowdown in country’s economic growth rate in Q1 2024 from previous three months.· South Korea is Vietnam’s largest base oils supplier in Q1 2024; Singapore had previously been the country’s largest supplier..· Trend reflects importance of key markets like Vietnam in face of China’s growing self-sufficiency and prospect of similar development in India..· India’s March base oils supply lags demand by largest margin in fourteen months..· Subsequent moves to replenish stocks likely had larger impact on India’s base oil prices in Q1 2024, to lock in supplies that then reached India in early Q2 2024.· Buying interest in additional supplies over coming weeks likely to be more opportunistic and linked to competitiveness of offers of overseas supplies.· India’s demand for supplies from Singapore stays unusually firm in early Q2 2024.· Firm demand could reflect attraction of more regular and rapid shipments compared with other sources like US and Middle East..· India’s premium of domestic retail diesel prices to CFR India N70 prices holds at lowest in five months..· Lower premium could curb attraction of securing additional supplies of very-light grade base oils.· India’s CFR Group II N150 cargo price premium to FOB NE Asia prices falls to lowest since Aug 2023.· Sustained slide in N150 premium since mid-March 2024 suggests weaker demand outweighs any change in supply fundamentals.· India’s CFR Group II N500 premium to Group I SN 500 prices extends rise to highest since 2022.· Rising premium boosts incentive for buyers to procure more SN 500 instead..Global base oils demand outlook: Week of 29 April
· Asia’s base oils demand likely to slow down following further slide in feedstock and diesel prices.· Lower feedstock/diesel prices raise expectations of lower base oils prices.· Expectations of lower base oils prices incentivize buyers to hold back.· Less feasible arbitrage to outlets like China and India add to signs of more muted demand..· China’s demand for supplies from regular overseas suppliers point to steady flows at lower levels, after signs of slowdown in shipments in April 2024 from the previous month.· Large share of the supplies bound for China likely consist of term volumes.· Domestic buyers face growing incentive to redirect term volumes to other overseas markets as domestic Chinese Group II prices extend weakness versus FOB NE Asia prices to lowest in almost five months.· China’s domestic Group I brightstock price premium to FOB Asia prices shows signs of having plateaued.· Brightstock premium stays unusually high, still falls to lowest in more than two months..· Any slowdown in China’s demand for brightstock could boost availability of the product for other outlets like southeast Asia or India.· Asia’s lower Group I production capacity means any price-weakness would be driven more by weaker demand than rise in supply.· FOB NE Asia Group II N500 premium to Group I SN 500 rises to highest since Sept 2023.· Rising premium boosts incentive for blenders to use more SN 500.· Tight availability of Group I SN 500 limits blenders' leverage to pursue any such move. .· Singapore’s base oils exports to China show signs of improving in April 2024 from previous month but stay lower than usual.· Singapore’s exports to China slow sharply in H2 April 2024, mirroring similar trend with shipments from Taiwan to China..· Japan’s March domestic base oils/lube demand rises to four-month high, adding to widespread seasonal pick-up in consumption in Asia in the month of March.· Japan’s domestic lube demand could rise more strongly than usual in Q2 2024 amid an expected recovery in the country’s automobile production.· Any further rise in Japan’s domestic demand could consume more of the country’s base oils supply, curbing further the volume of Group I supplies available for export..· Trend would exacerbate Asia-Pacific region’s tight supply of Group I base oils..· Vietnam’s March base oils imports rise to five-month high, outpace year-earlier levels and add to regionwide trend of firmer consumption in the month of March.· Vietnam’s base oils imports still fall in Q1 2024 to lowest in more than a year..· Drop in imports coincides with slowdown in country’s economic growth rate in Q1 2024 from previous three months.· South Korea is Vietnam’s largest base oils supplier in Q1 2024; Singapore had previously been the country’s largest supplier..· Trend reflects importance of key markets like Vietnam in face of China’s growing self-sufficiency and prospect of similar development in India..· India’s March base oils supply lags demand by largest margin in fourteen months..· Subsequent moves to replenish stocks likely had larger impact on India’s base oil prices in Q1 2024, to lock in supplies that then reached India in early Q2 2024.· Buying interest in additional supplies over coming weeks likely to be more opportunistic and linked to competitiveness of offers of overseas supplies.· India’s demand for supplies from Singapore stays unusually firm in early Q2 2024.· Firm demand could reflect attraction of more regular and rapid shipments compared with other sources like US and Middle East..· India’s premium of domestic retail diesel prices to CFR India N70 prices holds at lowest in five months..· Lower premium could curb attraction of securing additional supplies of very-light grade base oils.· India’s CFR Group II N150 cargo price premium to FOB NE Asia prices falls to lowest since Aug 2023.· Sustained slide in N150 premium since mid-March 2024 suggests weaker demand outweighs any change in supply fundamentals.· India’s CFR Group II N500 premium to Group I SN 500 prices extends rise to highest since 2022.· Rising premium boosts incentive for buyers to procure more SN 500 instead..Global base oils demand outlook: Week of 29 April
