· Asia’s base oils demand could get support from signs of more limited surplus supply and higher feedstock costs.· More limited surplus coincides with slump in regional base oils margins.· Refiners’ leverage to adjust prices in response to recent slide in margins likely to reflect relative strength of demand.· Any lack of significant price adjustments, when supply surplus is tighter, would point to weaker demand.· Any pick-up in price adjustments would suggest limited supply surplus outweighs any demand weakness..· Asia’s lube demand faced seasonal pick-up in Sept 2024 after consumption fell to six-month low in Aug 2024..· Firmer demand coincides with regional plant maintenance and plant closure in Sept-Oct 2024.· Plant maintenance/closure likely to keep availability tighter, leaving supply struggling to keep pace with demand in early Q4 2024..· Blenders’ higher stocks, and prospect of seasonal slowdown in demand in coming weeks, could curb impact of tighter supply.· Even so, tighter supply-demand fundamentals likely to boost buying interest in supplies from other sources.· US less likely to be one such source, with arbitrage from that market to Asia improving but still hard to work..· Taiwan’s base oils exports fall to seven-month low in Sept 2024 on dip in shipments to China and southeast Asia..· Fall in shipments to southeast Asia could reflect blenders’ still-sufficient inventories following rise in Asia exports to the region in July-Aug 2024.· Fall in shipments to China could reflect country’s increased self-sufficiency after domestic Group II output rebounds in Sept 2024..· China’s base oils exports to Singapore show signs of rising in recent weeks.· Rise in shipments adds to signs of sufficient domestic supply.· China’s domestic Group II base oils prices weaken vs Shandong diesel price and FOB NE Asia cargo price..· China’s weaker base oils values contrast with sustained price strength since late-Q2 2024.· Any extension of recent price weakness would add to signs of sufficient domestic supply and more muted requirements for overseas volumes..· India’s lube demand rises in Sept 2024 for fifth time in six months..· India’s lube demand typically rises in fourth quarter after seasonal slowdown in third quarter.· Firm lube demand over coming months would keep pressure on base oils supply to keep pace.· Prospect of dip in supplies from South Korea at start of Q4 2024 could add to challenge for supply to keep pace with demand.· Any such slowdown in supplies would add to pressure for strong rise in domestic base oils output or for buyers to line up more shipments from alternative sources.· India’s base oils imports show signs of rising strongly in Sept 2024, helping to replenish stocks.· India takes delivery of shipment from US in early-Oct 2024, with another cargo expected to arrive in coming week.· Even so, US unlikely to be significant source of larger volumes at least for several more months.· Dynamic increases importance of supplies from other sources like Singapore, Taiwan and Saudi Arabia..· CFR India Group II light-grade base oil price premium to FOB NE Asia price holds at highest since Apr 2024.· CFR India Group II heavy-grade premium to FOB NE Asia price rebounds to highest since July 2024, from discount in Aug-Sept 2024..· Firm/rebounding premium points to ongoing/rising buying interest, facilitates arbitrage to move more shipments from Asia to India..· Taiwan’s base oils shipments to India rebound in Sept 2024 even as its total exports fall..· Another large shipment from Taiwan is likely bound for India in Oct 2024..· Singapore’s base oils exports to India by contrast fall in recent weeks, while shipments to southeast Asia rise..· Slowdown in shipments from Singapore to India adds to importance of supplies from other sources..· Pakistan’s base oils demand shows signs of sustained growth, with supply rising in Aug 2024 for fourth time in five months..· An extension of that trend could boost country’s already-rising requirements for supplies from overseas markets.· A rise in demand for overseas supplies would add to importance of Pakistan as key outlet for base oils supplies from Asia.· Competition for Pakistan market shows signs of intensifying as steady flow of shipments from US continues to move to the country..· Rising competition has large impact on South Korea, whose share of Pakistan’s imports slumps so far in 2024..Taiwan’s Sept base oils exports fall.India’s September lube demand rises.Pakistan’s Aug base oils imports rise.Asia base oils demand outlook: Week of 7 Oct
