· Asia’s base oils demand likely to get support from seasonal pick-up in requirements and signs of tightening supply.· Firmer base oils prices add to signs of more balanced-to-tight supply-demand fundamentals.· Concern that prices will continue to trend upwards could add to demand as buyers seek to lock in supplies at current price levels.· Signs of limited arbitrage shipments from other regions to Asia could boost demand for any surplus supplies within the region.· Signs of still-limited availability of heavy-grade base oils could spur stronger demand for those grades, compounding their supply tightness..· Base oils demand in China typically rises after lunar new year holidays amid moves to build stocks ahead of spring oil-change season.· China’s demand for overseas supplies typically rises strongly in first quarter of the year.· China’s demand for overseas supplies of Group III base oils could be lower this time as higher domestic Group III production covers more of its requirements..· Demand for other grades for which China is structurally short could hold firmer, even if lower than previously.· CFR NE Asia Group I brightstock discount to CFR India cargo price tightens to narrowest in almost five months..· Narrower discount points to firmer supply-demand fundamentals in China.· Ongoing discount contrasts with premium to CFR India price the same time a year earlier, pointing to weaker fundamentals vs year-earlier levels.· China’s domestic Group II N500 premium to FOB Asia cargo price holds relatively firm and above year-earlier levels after rebounding in Nov-Dec 2024..· Firmer premium points to tighter fundamentals, facilitates arbitrage to import additional supplies..· Demand in other parts of Asia also likely to rise.· Thailand’s lube demand rises in Dec 2024 for first time in five months..· Rise in demand adds to pick-up in consumption in southeast Asia at year-end..· Firmer consumption contrasts with fall in Asia’s base oils exports to southeast Asia in Dec 2024.· Firmer demand and lower supply likely leaves blenders with lower stocks at start of this year.· Blenders’ lower stocks, and prospect of tighter supply later in Q1 2025, boosts incentive to replenish inventories early.· Any delayed moves to replenish low stocks could magnify impact of higher demand and tighter supply later in Q1 2025..· Singapore’s base oils exports to southeast Asia stay lower than usual in four weeks to early-Feb 2025..· Lower exports suggest that blenders may be holding off replenishing stocks or securing supplies from other sources instead..· India’s imported Group II base oils cargo prices edge up vs FOB Asia prices for first time this year..· CFR India cargo price premium to FOB Asia price remains weak, especially vs year-earlier levels and despite signs of tight supply at end-2024.· India’s base oils supply lags demand in Dec 2024 for ninth time in ten months..· India’s weaker base oils prices in recent weeks could suggest buyers secured sufficient additional volumes for delivery early this year.· Buyers’ inventories get boost following arrival of wave of arbitrage shipments from US in Jan 2025.· Weaker prices in recent weeks could point to buyers’ preference to avoid large stock-build, or point to concern about weaker demand.· Even so, weaker prices precede seasonal rise in consumption in India in month of March.· Weaker prices could put pressure on overseas suppliers to adjust prices lower if they face pressure to clear surplus volumes.· Signs of more limited surplus supply in Asia, Europe and US curb pressure on overseas suppliers to adjust prices lower.· Upcoming plant maintenance in India could curb availability of surplus supplies in its domestic market in coming weeks.· Any concern about tighter-than-expected fundamentals could trigger adjustment in CFR India prices that boost attraction of moving more supplies to India..· Pakistan’s imports of Group II heavy-grade base oils fall as share of total imports in Dec 2024 to lowest in eight months..· Falling Group II heavy-grade share contrasts with rise in Group I heavy neutrals share of total imports.· Diverging trends leave heavy grades accounting for similar share of total imports.· Dynamic could reflect impact of steep premium of Group II heavy grades versus Group I base oils, boosting incentive for buyers to procure more Group I supplies instead..· US accounts for close to 30% of Pakistan’s Group II heavy-grade imports in 2024, up from 1% in 2023..· Dynamic reflects growing competition from US shipments for larger share of Pakistan’s imports.· Dynamic could squeeze demand for supplies from Asia, at a time when growing regional base oils production capacity boosts importance of outlets like Pakistan..Asia’s December lube demand rises .Pakistan’s Dec base oils supply falls.Thailand’s December lube demand rises.China’s Jan base oils output holds firm
