· Asia’s base oils demand could be firmer than usual for time of year as rising feedstock costs and prospect of tightening fundamentals boost incentive to replenish depleted stocks..· Refinery run rates in India and China could face pressure from any interruption in flow of feedstock supplies from Russia.· Any such drop in domestic run-rates and production could curb base oils output, prompting buyers to turn to overseas markets to cover more of their supplies.· Uncertainty about such a scenario could anyway prompt buyers to carry out moves to line up more overseas shipments to ensure sufficient supply to cover requirements. · China’s Group II base oils premium to domestic diesel price holds close to lowest since end-2023 after slumping earlier this month..· Firmer diesel values boost incentive for domestic refiners to cut base oils output and to produce more of the motor fuel.· Dynamic again raises prospect of drop in domestic base oils supply and subsequent rise in demand for overseas shipments.· Any such scenario would be more apparent after lunar new year holidays.· China’s base oils demand likely to ebb in interim at month-end and in early-Feb 2025 during lunar new year holidays..· Base oils demand in southeast Asia could revive earlier than expected amid unusually steep slump in South Korea’s exports to the region at end-2024..· Fall in shipments partially counters seasonal slowdown in demand, leaving buyers with lower stocks and subsequent need to replenish inventories earlier.· Concern about tighter-than-expected supply earlier than expected could add to moves to cover requirements earlier.· Any such tighter-than-expected supply could complicate such moves. · Singapore’s four-week base oils exports to southeast Asia edge higher but stay lower than usual, especially compared with Q2-Q3 2024..· Steady-to-lower volumes from Singapore to southeast Asia, and slump in exports from South Korea, could leave region’s inventories lower ahead of seasonal rise in demand later in Q1 2025..· Philippines remains outlier in Asia-Pacific region that is seeing rising consumption of Group II base oils.· Philippines’ base oils imports from Thailand more than double in Nov 2024, rise by more than 35% in Jan-Nov 2024 from year earlier.· Rising imports contrast with fall in supplies from South Korea and Singapore in Jan-Nov 2024.· Imports from Thailand duly account for growing share of Philippines’ base oils supply in 2024, while share falls from Singapore and South Korea..· Asia’s shrinking availability of Group I base oils, and need for premium-grade base oils for higher-quality lubricants, makes Philippines an attractive market to target for region’s premium-grade refiners..· India’s base oils demand for shipments from overseas markets could get support from prospect of tighter supplies in Q1 2025.· India’s base oils imports, excluding very light grades, fall in Dec 2024 to lowest level in close to two years..· Drop in imports increases Indian buyers’ reliance on sustained rise in domestic base oils output in Q1 2025, when lube demand typically peaks.· Any lack of such a rise in domestic output would squeeze supply further.· Pick-up in shipments from US to India since late last year points to moves to secure additional supplies from overseas markets. .· India’s Group I/II heavy-grade base oils imports fall in Dec 2024 to lowest since mid-2023..· Simultaneous fall in Group I and Group II heavy-neutrals base oils imports likely to leave blenders with lower stocks.· Lower imports and stocks likely to boost demand from domestic and overseas sources with surplus heavy-grade supplies..· India’s imported Group II cargo price premium narrows further vs FOB NE Asia prices, holds steady vs US export prices..· Price dynamic suggests Indian buyers are in little rush to lock in additional arbitrage cargoes.· Price dynamic boosts attraction of US shipments rather than supplies from Asia for any such cargoes.· Extended time period between procurement, loading and delivery of shipments from US could curb attraction of lining up additional supplies that would likely only reach India in Q2 2025.· Extended time period could conversely boost demand from buyers that are seeking to lock in prices at current levels in anticipation of upward price trend in coming months..· Pakistan’s base oils imports account for growing share of country’s base oils supply in H2 2024..· Imports share rises in response to growing demand and insufficient domestic production.· Signs of healthy economic activity point to ongoing rise in demand.· South Korea was Pakistan’s largest overseas base oils supplier in 2023.· South Korea faced more competition in 2024 amid rise in volumes from Singapore and US..· Growing competition from overseas refiners to supply Pakistan market likely to extend into 2025.· Planned rise in base oils production capacity in southeast Asia and India set to increase importance and value of outlets like Pakistan..Pakistan’s Nov base oils supply rises.India’s Dec heavy-grade imports fall.India’s December base oils imports slip .S Korea's Dec exports to SE Asia fall.Asia base oils demand outlook: Week of 13 Jan.Base Oil News stories and analysis also available on ICIS platform
