· Asia’s base oils prices hold firm vs feedstock/competing fuel prices.· Asia’s firm base oils price differentials vs gasoil/VGO point to tight supply-demand fundamentals, incentivize refiners to maximise output and exports, especially of heavy grades.· Supply likely to stay tighter, even with firmer margins, as round of plant maintenance gathers pace and coincides with seasonal rise in demand.· Asia Group II heavy-grade base oils price premium to Group I SN 500 extends rise in Feb 2025 to highest since Q4 2021..· Group II heavy-grade premium typically gyrates more and in narrower range as higher premium incentivizes switch to Group I base oils.· Extended rise in Group II heavy-grade premium points to breakdown of that pattern, exacerbating supply tightness..· Asia's firm base oils prices keep shut the arbitrage to move regional supplies to other more distant markets.· Firm prices could facilitate more arbitrage shipments to Asia-Pacific region.· Steady-to-higher prices and signs of more limited surplus supply in other key markets like US and Europe complicate any such shipments.· Dynamic puts onus on regional buyers to raise prices to make arbitrage more feasible.· Such a scenario shows signs of materializing in India, whose imported price premium to US export prices rises to widest since May 2024..· South Korea’s base oils exports could tighten further ahead of and during round of scheduled plant maintenance work starting at end-Feb 2025.· Any tightness would follow signs that slowdown in South Korea’s base oils exports at end-2024 extended into early 2025.· South Korea’s tighter supply forces buyers to rely more on other regional refiners instead.· Base oils exports from other key regional suppliers like Taiwan and Singapore show signs of rising strongly so far in Feb 2025.· Taiwan’s base oils shipment surge so far in Feb 2025, with export volumes already close to total exports in all of Jan 2025.· Taiwan's exports of Group II heavy grades stay higher than usual so far in Feb 2025 for a second month.· Taiwan’s Group II heavy grades account for more than 60% of its base oils exports in Jan 2025..· Heavy-grade share of exports rises from less than 40% in Dec 2024 to highest in almost two years.· Taiwan’s rising share of heavy-grade exports taps Asia’s tight availability and high price of Group II N500..· Singapore’s base oils exports rebound strongly in H1 Feb 2025.· Rebound is insufficient to balance out slump in shipments in H2 Jan 2025, leaving exports over last four weeks at their lowest in more than a year..· Any extension of rebound in Singapore's exports over coming weeks would be timely, helping to cushion impact of widespread round of plant maintenance in Asia..· Global base oils supply falls to seven-month low in Nov 2024..· Supply falls as dip in output in Americas and Europe outweighs higher supply in Asia..· Dip in output in Americas and Europe curbs size of supply-build in Q4 2024, cuts arbitrage flows to Asia for delivery early this year.· Dynamic increases regional blenders’ reliance on Asia-Pacific suppliers to replenish stocks/cover requirements in early 2025..Taiwan’s January base oils exports fall.Asia base oils demand outlook: Week of 17 Feb
