· Asia’s base oils demand likely to stay lower as seasonal dip in consumption coincides with signs of earlier-than-expected pick-up in supply.· Asia’s base oils prices remain high vs feedstock/gasoil prices, pointing to tighter supply-demand fundamentals.· Easing demand and improving supply raise expectations of lower base oils prices, adding to buyers’ preference to hold back.· China’s base oils demand for overseas supplies likely to stay muted as buyers maintain lower stocks and cover more requirements with supplies from domestic producers.· China’s base oils demand for overseas supplies likely to get boost when buyers need to cover for lower domestic supply.· Prospect of lower domestic Group II base oils output in China in coming weeks could duly boost demand for overseas supplies.· Any such boost in demand for overseas supplies could be smaller than usual as drop in output coincides with seasonal dip in consumption.· China’s domestic Group II base oils price premium to FOB NE Asia prices holds relatively firm and in narrow range since H2 Sept 2024..· Steady premium could support arbitrage to line up additional shipments from markets like South Korea.· Demand for supplies from markets like South Korea could get further boost in place of sustained dip in shipments from Taiwan to China..· China accounts for less than 20% of Taiwan’s total base oils exports in Oct 2024..· China’s shrinking imports from Taiwan likely reflects more the impact of its growing domestic supply, in addition to weak domestic demand.· Removal of tariff concessions for shipments from Taiwan in June 2024 cuts further the attraction of supplies from Taiwan..· Southeast Asia base oils demand could ease in response to expected slowdown in lube consumption and signs of improving base oils supply.· Base oils exports to southeast Asia from key regional suppliers revert to more typical levels in Oct 2024, reflecting signs of improving supply..· Shipments from Singapore account for growing share of base oils imports in key markets in southeast Asia in first nine months of 2024, while South Korea’s share falls..· Prospect of rising base oils supply in Asia-Pacific region in coming year boosts importance of markets like southeast Asia and adding to market share in those outlets.· Singapore’s share of Philippines’ base oils imports exceeds South Korea’s share for third month in Sept 2024, reflecting trend of its growing market share in southeast Asia..· South Korea’s share exceeded Singapore’s share during previous seven months to June..· India’s base oils demand could turn more muted amid expectations of improvement in supplies over coming months.· India’s base oils imports fall less than expected in Oct 2024 as rise in shipments from Middle East cushions dip in supplies from South Korea..· Smaller-than-expected fall in imports curbs pressure on blenders’ inventories.· Higher-than-expected stocks give blenders leverage to hold back for longer.· Expectations of lower prices and easing supply-tightness over coming months add to incentive to hold back for now. .· India’s Group II heavy-grade base oils imports fall to seventeen-month low in Oct 2024..· Pick-up in imports of Group I heavy-neutrals base oils helps to cushion slowdown in heavy-grade supplies.· Trend cuts Group II share of Group I/II heavy-grade imports to seven-month low..· Trend suggests that buyers continue to have flexibility to use Group I base oils instead of Group II base oils if availability and price incentivize such a move.· India’s imported Group II heavy-grade prices improve relative to FOB NE Asia prices since start of Q4 2024..· But CFR India N500 price differential remains low versus first five months of 2024.· Relative price weakness could reflect pressure from steady availability of Group I supplies..India’s October base oils imports mixed.India’s Oct Grp II base oils imports fall.Taiwan’s October base oils exports rise.Asia base oils demand outlook: Week of 11 Nov
