Asia base oils supply outlook: Week of 31 March

·         Asia’s base oils prices extend dip versus feedstock/gasoil prices.

·         Margins hold firm for heavy grades, pointing to still-strong supply-demand fundamentals.

·         Firm margins partially cushion impact of weaker light-grade margins.

·         Plant maintenance work throughout Asia could keep supply balanced-to-tight over coming months.

·         Balanced-to-tight supply likely to coincide with steady demand over the coming weeks.

·         Balanced-to-tight supply increases importance of steady-to-higher volumes from refiners unaffected by plant maintenance work.

·         Firm margins, refiners’ incentive to maintain higher output, closed arbitrage to other markets, and typical slowdown in demand later in Q2 could trigger more rapid recovery in supply later in the quarter.

·         Taiwan’s base oils exports show signs of falling sharply in March 2025 from Feb 2025.

·         Share of Taiwan’s shipments to China rises in March 2025 even as total volume bound for China stays low.

·         Drop in Taiwan's total shipments adds to importance of exports from markets like Singapore holding at higher levels.

·         Singapore’s base oils exports, and exports to southeast Asia stay high in March 2025 for second month.

·         Rising exports to southeast Asia boost Singapore’s share of the region’s base oils supplies.

·         Rising exports to southeast Asia increasingly match volume of supplies from South Korea to the region since start of H2 2024.

·         Rising share of southeast Asia’s supply boosts the region as key outlet for planned pick-up in output and exports from Singapore later this year.

·         Besides Singapore, southeast Asia’s lack of any other rise in production capacity contrasts with rising capacity in India and China’s growing self-sufficiency.

·         Dynamic adds to importance of boosting market share in southeast Asia.

·         Singapore’s base oils imports from Group I sources hold firm in last four weeks and in Q1 2025, contrasting with slump in shipments in early-2024.

·         Imports from Europe and Saudi Arabia account for all of Group I shipments in last four weeks, up from already-high share of more than 70% in three months to end-Feb 2025.

·         High share from Europe and Saudi Arabia reflects rise in shipments from those markets and tight availability in Asia.

·         Rise in shipments from markets like Europe tightens Group I supply in those markets.

·         Lack of shipments from markets like Japan, Indonesia and Thailand in past four weeks is unusual.

·         Lack of shipments could reflect impact of plant maintenance or other production issues in those markets.

·         South Korea’s February base oils output falls to ten-month low in Feb 2025.

·         Output falls sharply even with plant maintenance work only beginning at end-Feb 2025.

·         Fall in output leaves base oils supply lagging demand, complicates any stock-building plans to cushion impact of plant maintenance work.

·         Lower stocks, and round of plant maintenance work extending through Q2 2025, raise prospect of South Korea’s supply staying tighter than usual through to end-H1 2025.

·         India’s base oils output falls to four-month low in Feb 2025.

·         Output likely to stay lower in March 2025 and in Q2 2025 because of plant maintenance work.

·         Lower output likely to sustain firm requirements for supplies from overseas markets.

·         Asia’s imports of premium-grade base oils from Qatar fall in Feb 2025, staying unusually low for third time in fourth month.

·         Dip in shipments cuts Asia’s total imports from Qatar in four months to Feb 2025 by almost 50% from year-earlier levels.

·         Fall in shipments coincides with doubling of China’s Group III base oils output in four months to Feb 2025 from year-earlier levels.

·         Even so, volume size of fall in Asia’s imports from Qatar far exceeds rise in China’s Group III output.