Asia base oils – week of April 10: Supply outlook

·        India’s retail diesel premium to discounted crude stays high – incentivizing refiners to maintain high run-rates.

·        China’s Shandong diesel premium to crude steadies after sliding to two-month low even amid recovery in diesel consumption.

·        China’s Shandong diesel premium to discounted crude much higher.

·        Refinery run rates stay lower in China’s Shandong and Japan, higher in US.

·        Overlapping timing of plant maintenance in South Korea and Spain in Q2 2023 likely to tighten Group III base oils supply.

·        Plant maintenance in China caps recovery in output in that market.

·        Plant maintenance in Japan likely to curb its exports over coming months.

·        China’s March base oils output improves from February, stays low.

·        China’s low base oils output mirrors muted recovery in manufacturing activity.

·        China’s low base oils output continues to support firmer demand for overseas supplies.

·        Supply from China starts to show up in more places, including Latin American markets like Argentina – even with output at low levels.

·        Any stronger revival in China’s base oils output would curb requirements for overseas supplies and increase availability for overseas markets.

·        Indonesia’s base oils exports show signs of staying lower than usual in February.

·        Base oils exports from Asia show signs of extending recovery in February, replenishing buyers’ stocks and curbing urgency to procure more supplies.

·        Rise in February exports contrasts with signs of lower production in Asia-Pacific.

·        Trend would boost buyers’ stocks, cut refiners’ stocks.

·        Trend would precede pick-up in plant-maintenance work in Asia over following months.

·        Thailand’s base oils supply lags demand in February, raising prospect of stock replenishment / more muted urgency to clear supplies over following months.

·        Singapore’s four-week base oils exports to China fall sharply after surging in 1H March.

·        Singapore’s four-week base oils exports to India rebound to highest in more than a year after falling throughout March.

·        Singapore’s base oils exports to southeast Asia hold firm over past four weeks after dipping earlier in the year.

·        Trend points to redirection of more shipments to India and southeast Asia and away from China.

·        India continues to take delivery of low volume of US supplies in March amid unusually light flow of arbitrage shipments so far this year.

·        More US supplies move to Mexico instead in Q1 2023.

·        Arbitrage flows from US to India show signs of increasing in recent weeks.