· Asia’s base oils demand faces seasonal slowdown over coming weeks.· Rising feedstock costs put pressure on refiners to raise prices.· Concern about higher prices can trigger a pick-up in demand as buyers move to lock in prices at current, lower levels.· Any rise in prices could also trigger a drop in demand at a time of year when buyers face less urgency to hold larger stocks and supply shows signs of rising.· Asia’s supply-demand fundamentals point to such a trend over the coming months.· Asia’s Group II heavy-grade prices stay high vs light-grade prices, extend rise vs Group I heavy-neutrals prices.· Trend points to still-firm supply-demand fundamentals for Group II heavy grades.· China’s base oils demand shows signs of staying sufficiently strong to absorb country’s domestic supply.· China’s narrowing Group II domestic price premium to FOB NE Asia prices suggests supply-demand fundamentals are at levels that have little need for additional arbitrage shipments from the region..· Singapore’s base oils exports to China slump during the two weeks to early April 2024.· Drop in shipments likely leaves Singapore’s base oils exports to China lower than usual in March 2024.· Lower-than-usual shipments contrasts with surge in Singapore's exports to China in March 2023.· Contrast between this and last year suggests China’s supply is sufficient to meet demand.· Contrast suggests Singapore is focusing on tapping firmer demand in other markets like southeast Asia and India..· Japan’s domestic base oils/lube demand rises strongly in Feb 2024 from year-earlier levels.· Rising domestic demand accounts for growing share of Japan’s shrinking total supply..· Rising domestic demand and shrinking supply trigger sustained slump in base oil exports.· South Korea accounts for growing share of Japan’s base oil exports, compounding the drop in shipments to other markets..· Trend set to support sustained demand for alternative supplies in southeast Asia especially – for Group I or Group II base oils..· Thailand’s February lube demand rises for seventh month, with consumption of base oils from domestic suppliers rising to four-month high..· Base oils consumption rises even as plant maintenance work cuts domestic base oils output.· Higher demand for domestic supplies could reflect impact of slowdown in base oils imports from Japan in first two months of 2024.· Any extension of such a trend could cut for longer the volume of Thailand’s base oils supplies available for export.· Combination of firmer domestic demand and lower output already cuts Thailand’s exports in first two months of 2024 by more than 50% year on year..· Rising US export prices could complicate flow of additional shipments from that market to India..· Any slowdown in arbitrage opportunities from US could boost India’s demand for supplies from other sources.· India’s steady or lower CFR Group II price premium to FOB NE Asia prices suggest supply remains sufficient to cover demand.· India’s CFR price premium to FOB NE Asia Group II N150 prices stays narrower than month-earlier levels.· Narrower premium coincides with signs of India’s base oils imports from Saudi Arabia holding relatively firm in March 2024 even as they slip from previous months.· India’s imports from Saudi Arabia get boost from arrival of swathe of shipments in H2 March 2024.· Prospect of firmer-than-expected shipments from Saudi Arabia would curb India’s urgency to lock in alternative supplies from other markets.· Another shipment from Saudi Arabia is expected to reach India in H1 April 2024.· India’s CFR price premium to FOB Asia Group I SN 150 and brightstock prices stays firm.· Firm premium coincides with signs of a slowdown in India’s Group I base oils imports in March 2024.· Firm premium to FOB Asia prices points to ongoing demand for supplies from the region..Global base oils arb outlook: Week of April 8.Global base oils margins outlook: Week of April 8.Global base oils demand outlook: Week of April 8
· Asia’s base oils demand faces seasonal slowdown over coming weeks.· Rising feedstock costs put pressure on refiners to raise prices.· Concern about higher prices can trigger a pick-up in demand as buyers move to lock in prices at current, lower levels.· Any rise in prices could also trigger a drop in demand at a time of year when buyers face less urgency to hold larger stocks and supply shows signs of rising.· Asia’s supply-demand fundamentals point to such a trend over the coming months.· Asia’s Group II heavy-grade prices stay high vs light-grade prices, extend rise vs Group I heavy-neutrals prices.· Trend points to still-firm supply-demand fundamentals for Group II heavy grades.· China’s base oils demand shows signs of staying sufficiently strong to absorb country’s domestic supply.· China’s narrowing Group II domestic price premium to FOB NE Asia prices suggests supply-demand fundamentals are at levels that have little need for additional arbitrage shipments from the region..· Singapore’s base oils exports to China slump during the two weeks to early April 2024.· Drop in shipments likely leaves Singapore’s base oils exports to China lower than usual in March 2024.· Lower-than-usual shipments contrasts with surge in Singapore's exports to China in March 2023.· Contrast between this and last year suggests China’s supply is sufficient to meet demand.· Contrast suggests Singapore is focusing on tapping firmer demand in other markets like southeast Asia and India..· Japan’s domestic base oils/lube demand rises strongly in Feb 2024 from year-earlier levels.· Rising domestic demand accounts for growing share of Japan’s shrinking total supply..· Rising domestic demand and shrinking supply trigger sustained slump in base oil exports.· South Korea accounts for growing share of Japan’s base oil exports, compounding the drop in shipments to other markets..· Trend set to support sustained demand for alternative supplies in southeast Asia especially – for Group I or Group II base oils..· Thailand’s February lube demand rises for seventh month, with consumption of base oils from domestic suppliers rising to four-month high..· Base oils consumption rises even as plant maintenance work cuts domestic base oils output.· Higher demand for domestic supplies could reflect impact of slowdown in base oils imports from Japan in first two months of 2024.· Any extension of such a trend could cut for longer the volume of Thailand’s base oils supplies available for export.· Combination of firmer domestic demand and lower output already cuts Thailand’s exports in first two months of 2024 by more than 50% year on year..· Rising US export prices could complicate flow of additional shipments from that market to India..· Any slowdown in arbitrage opportunities from US could boost India’s demand for supplies from other sources.· India’s steady or lower CFR Group II price premium to FOB NE Asia prices suggest supply remains sufficient to cover demand.· India’s CFR price premium to FOB NE Asia Group II N150 prices stays narrower than month-earlier levels.· Narrower premium coincides with signs of India’s base oils imports from Saudi Arabia holding relatively firm in March 2024 even as they slip from previous months.· India’s imports from Saudi Arabia get boost from arrival of swathe of shipments in H2 March 2024.· Prospect of firmer-than-expected shipments from Saudi Arabia would curb India’s urgency to lock in alternative supplies from other markets.· Another shipment from Saudi Arabia is expected to reach India in H1 April 2024.· India’s CFR price premium to FOB Asia Group I SN 150 and brightstock prices stays firm.· Firm premium coincides with signs of a slowdown in India’s Group I base oils imports in March 2024.· Firm premium to FOB Asia prices points to ongoing demand for supplies from the region..Global base oils arb outlook: Week of April 8.Global base oils margins outlook: Week of April 8.Global base oils demand outlook: Week of April 8
