China’s base oils output rose in March to the second-highest level in 27 months, curbing the country’s requirements for supplies from overseas refiners.China’s base oils imports previously rose strongly in the first few months of each year to meet a seasonal pick-up in the country’s lube demand.Rising domestic production now covered more of that demand.Domestic blenders’ preference to maintain lower inventories, and competitive prices for domestic supplies, added to the attraction of procuring volumes from local refiners.The move forced regional refiners to redirect more of their supplies to other markets instead.The trend is likely to continue, except for pockets of demand for products for which China is short.China’s total paraffinic base oils output of more than 460,000 tonnes in March rose from less than 440,000 tonnes the previous month, OilChem China data showed.The rise in production lifted total output to more than 1.35 million tonnes in the first quarter of the year, up 43% from year-earlier levels of less than 960,000 tonnes.Higher Group II and Group III base oils output in March countered a drop in Group I production to a seven-month low.A major Group I base oils unit in northeast China began a scheduled shutdown in late-March. The shutdown is set to last until mid-May.China’s domestic Group II base oils prices weakened relative to diesel prices through most of March 2024 and relative to FOB Asia base oils prices since the start of the year, ICIS data showed.The weaker prices suggested that current Group II supply was more than sufficient to cover demand.China’s domestic Group I SN150 price premium to diesel prices by contrast rose steadily over the last six months to the highest since last July.The domestic brightstock premium to FOB Asia prices is at its highest in two years.The firmer prices point to tighter supply-demand fundamentals for Group I base oils in China and ongoing requirements for additional supplies from overseas markets..Asia base oils demand outlook: Week of April 1.China Jan-Feb imports stay rangebound
China’s base oils output rose in March to the second-highest level in 27 months, curbing the country’s requirements for supplies from overseas refiners.China’s base oils imports previously rose strongly in the first few months of each year to meet a seasonal pick-up in the country’s lube demand.Rising domestic production now covered more of that demand.Domestic blenders’ preference to maintain lower inventories, and competitive prices for domestic supplies, added to the attraction of procuring volumes from local refiners.The move forced regional refiners to redirect more of their supplies to other markets instead.The trend is likely to continue, except for pockets of demand for products for which China is short.China’s total paraffinic base oils output of more than 460,000 tonnes in March rose from less than 440,000 tonnes the previous month, OilChem China data showed.The rise in production lifted total output to more than 1.35 million tonnes in the first quarter of the year, up 43% from year-earlier levels of less than 960,000 tonnes.Higher Group II and Group III base oils output in March countered a drop in Group I production to a seven-month low.A major Group I base oils unit in northeast China began a scheduled shutdown in late-March. The shutdown is set to last until mid-May.China’s domestic Group II base oils prices weakened relative to diesel prices through most of March 2024 and relative to FOB Asia base oils prices since the start of the year, ICIS data showed.The weaker prices suggested that current Group II supply was more than sufficient to cover demand.China’s domestic Group I SN150 price premium to diesel prices by contrast rose steadily over the last six months to the highest since last July.The domestic brightstock premium to FOB Asia prices is at its highest in two years.The firmer prices point to tighter supply-demand fundamentals for Group I base oils in China and ongoing requirements for additional supplies from overseas markets..Asia base oils demand outlook: Week of April 1.China Jan-Feb imports stay rangebound
