Asia’s base oils supply stayed lower than usual in March even as it rose from a thirty-three-month low in February.Asia’s base oils output recovered to more than 870,000 tonnes in March, up from less than 820,000 tonnes the previous month, government and industry data showed.The volume was still down from more than 1 million tonnes in March 2022 and March 2023.The volume excluded base oils output from China.The pick-up in supply also lagged the 130,000-tonne rise in the region’s lube demand in March from the previous month.The region’s surplus of supply over demand duly fell in response to a two-year low of less than 10,000 tonnes. It dipped from an already-low surplus of less than 90,000 tonnes in February.The smaller surplus cushioned the impact of a seasonal slowdown in Asia’s lube demand at the start of the second quarter of the year.The region’s base oils supply also showed signs of staying lower than usual in April amid a slowdown in exports from Taiwan, lower-than-usual shipments from Singapore and plant maintenance work in South Korea.The trend raised the prospect of slowing the speed of a build-up of surplus supplies in Asia at the start of the second quarter.A smaller supply surplus curbed pressure on refiners to keep open the arbitrage to outlets like India and China.Higher FOB Asia base oils cargo prices in April duly narrowed their discount to prices in those destination markets. That dynamic could change this month following the completion of plant maintenance work in South Korea in late April and signs of higher shipment volumes from Singapore in recent weeks.Increasingly firm base oils margins and weaker diesel values also incentivized refiners to maintain or raise production of the lubricant feedstock.Any larger pick-up in surplus supplies could put pressure on refiners to make more feasible the arbitrage to outlets in the region and in more distant markets..Asia’s March lube demand mixed
Asia’s base oils supply stayed lower than usual in March even as it rose from a thirty-three-month low in February.Asia’s base oils output recovered to more than 870,000 tonnes in March, up from less than 820,000 tonnes the previous month, government and industry data showed.The volume was still down from more than 1 million tonnes in March 2022 and March 2023.The volume excluded base oils output from China.The pick-up in supply also lagged the 130,000-tonne rise in the region’s lube demand in March from the previous month.The region’s surplus of supply over demand duly fell in response to a two-year low of less than 10,000 tonnes. It dipped from an already-low surplus of less than 90,000 tonnes in February.The smaller surplus cushioned the impact of a seasonal slowdown in Asia’s lube demand at the start of the second quarter of the year.The region’s base oils supply also showed signs of staying lower than usual in April amid a slowdown in exports from Taiwan, lower-than-usual shipments from Singapore and plant maintenance work in South Korea.The trend raised the prospect of slowing the speed of a build-up of surplus supplies in Asia at the start of the second quarter.A smaller supply surplus curbed pressure on refiners to keep open the arbitrage to outlets like India and China.Higher FOB Asia base oils cargo prices in April duly narrowed their discount to prices in those destination markets. That dynamic could change this month following the completion of plant maintenance work in South Korea in late April and signs of higher shipment volumes from Singapore in recent weeks.Increasingly firm base oils margins and weaker diesel values also incentivized refiners to maintain or raise production of the lubricant feedstock.Any larger pick-up in surplus supplies could put pressure on refiners to make more feasible the arbitrage to outlets in the region and in more distant markets..Asia’s March lube demand mixed
