· Asia’s base oils demand typically starts to revive in month of August as buyers seek to replenish stocks ahead of seasonal pick-up in consumption in final weeks of Q3.· Expectations of sufficient regional supply curb urgency to lock in volumes.· Firm base oils values vs crude/diesel add to expectations of firm output levels and sufficient supply.· Ongoing, if gradual, fall in outright base oils prices adds to attraction for buyers to hold back.· Trend incentivizes buyers to cover requirements with term volumes, hold off seeking additional supplies.· Price signals point to firmer buying interest in China than in India.· China’s base oils demand shows signs of holding steady amid balanced supply-demand fundamentals.· China’s domestic Group II light-grade price premium to FOB NE Asia prices extends rise to highest since Feb 2024..· Firmer premium makes arbitrage more feasible, points to tighter domestic supply.· Firmer premium coincides with slowdown in shipments from Taiwan to China in June-July 2024.· Firmer premium boosts feasibility of attracting shipments from other sources instead.· China’s domestic Group II heavy-grade price premium to light grades holds at highest in more than two years.· Group II heavy-grade price strength points to even firmer demand for those supplies..· Base oils demand in southeast Asia shows signs of holding steady-to-firm.· Singapore’s base oils exports to the region shows signs of holding firm in July 2024.· Vietnam’s base oils imports hold relatively steady in June for a fourth month.· South Korea continues to displace Singapore as Vietnam’s largest base oils supplier in H1 2024..· Rebound in Vietnam’s imports from Singapore in June 2024 narrows the shortfall vs supplies from South Korea.· Steady rise in South Korea’s share of Vietnam’s base oils imports in recent years highlights the importance of markets like Vietnam, which are reliant on imports to cover base oils requirements.· Importance of these markets is set to grow as India becomes more self-sufficient over the coming years..· Japan’s base oils/lube demand unusually weakens in month of June from the previous month..· Weaker demand coincides with steep contraction in Japan’s industrial production in June 2024 from previous month.· Weaker demand could reflect correction after unusually strong demand growth in April-May 2024, mirroring similar volatility of country’s monthly industrial production growth.· Japan’s weaker base oils demand cuts its share of the country’s supply to close to six-month low of 75% of the total..· Any extension of the trend could free up more surplus base oils supplies for export during Q3 2024, when demand in other markets also faces a seasonal slowdown..· India’s CFR Group II price premium to FOB NE Asia prices turns more mixed.· Light-grade premium to FOB NE Asia prices climbs to highest since April 2024, stays lower than Q1 2024.· Very-light grade price premium to Singapore gasoil prices extends rise, sustaining attraction of that arbitrage.· Heavy-grade premium to FOB NE Asia prices extends slide.· Narrow premium points to still-muted demand, curbs attraction of moving more supplies to India.· Arbitrage stays hard to work for light/heavy grades even with gradual removal of surplus stocks that built up in April-May 2024.· Stocks dwindle after India’s base oils and lube demand lags base oils supply in June 2024 for first time in three months.· Excluding imports of very-light-grade base oils, the supply shortfall in June 2024 grows to widest in seventeen months..· Lower stocks, a seasonal pick-up in lube demand from end-Q3 2024, and plant maintenance in South Korea around the same time, provide various spurs to support pick-up in demand.· Expectations of sufficient supplies and lower prices likely continue to incentivize some buyers to hold back or to procure steady volumes more regularly.· Singapore’s base oils exports to India rebound in July 2024, even with the narrow gap between FOB Asia and CFR India prices.· Shipments to India from other sources like Taiwan and South Korea also show signs of rising in July 2024.· Dynamic points to steady buying even with the narrow gap between FOB Asia and CFR India prices..· Pakistan’s base oils imports hold firm in June 2024 as surge in shipments from US cushion lower-than-usual volumes from South Korea and Singapore.· South Korea and Singapore account for more than 75% of Pakistan’s base oils imports in 2022 and 2023..· Group II heavy grades account for at least 50% of Pakistan’s imports in 2023 and H1 2024.· Growing base oils self-sufficiency in major markets like China and India boost importance of outlets like Pakistan for suppliers like South Korea and Singapore.· Any extension of flows from US to Pakistan would add to competition for a key market for Group II heavy-grade base oils.· Pakistan’s lube demand rises in Q2 2024 for third time in four quarters..· Firmer lube demand coincides with stronger industrial activity, rising car sales, adding to the country’s attraction for overseas base oils suppliers..India’s June base oils supply lags demand.Pakistan’s June base oils supply stays higher
· Asia’s base oils demand typically starts to revive in month of August as buyers seek to replenish stocks ahead of seasonal pick-up in consumption in final weeks of Q3.· Expectations of sufficient regional supply curb urgency to lock in volumes.· Firm base oils values vs crude/diesel add to expectations of firm output levels and sufficient supply.· Ongoing, if gradual, fall in outright base oils prices adds to attraction for buyers to hold back.· Trend incentivizes buyers to cover requirements with term volumes, hold off seeking additional supplies.· Price signals point to firmer buying interest in China than in India.· China’s base oils demand shows signs of holding steady amid balanced supply-demand fundamentals.· China’s domestic Group II light-grade price premium to FOB NE Asia prices extends rise to highest since Feb 2024..· Firmer premium makes arbitrage more feasible, points to tighter domestic supply.· Firmer premium coincides with slowdown in shipments from Taiwan to China in June-July 2024.· Firmer premium boosts feasibility of attracting shipments from other sources instead.· China’s domestic Group II heavy-grade price premium to light grades holds at highest in more than two years.· Group II heavy-grade price strength points to even firmer demand for those supplies..· Base oils demand in southeast Asia shows signs of holding steady-to-firm.· Singapore’s base oils exports to the region shows signs of holding firm in July 2024.· Vietnam’s base oils imports hold relatively steady in June for a fourth month.· South Korea continues to displace Singapore as Vietnam’s largest base oils supplier in H1 2024..· Rebound in Vietnam’s imports from Singapore in June 2024 narrows the shortfall vs supplies from South Korea.· Steady rise in South Korea’s share of Vietnam’s base oils imports in recent years highlights the importance of markets like Vietnam, which are reliant on imports to cover base oils requirements.· Importance of these markets is set to grow as India becomes more self-sufficient over the coming years..· Japan’s base oils/lube demand unusually weakens in month of June from the previous month..· Weaker demand coincides with steep contraction in Japan’s industrial production in June 2024 from previous month.· Weaker demand could reflect correction after unusually strong demand growth in April-May 2024, mirroring similar volatility of country’s monthly industrial production growth.· Japan’s weaker base oils demand cuts its share of the country’s supply to close to six-month low of 75% of the total..· Any extension of the trend could free up more surplus base oils supplies for export during Q3 2024, when demand in other markets also faces a seasonal slowdown..· India’s CFR Group II price premium to FOB NE Asia prices turns more mixed.· Light-grade premium to FOB NE Asia prices climbs to highest since April 2024, stays lower than Q1 2024.· Very-light grade price premium to Singapore gasoil prices extends rise, sustaining attraction of that arbitrage.· Heavy-grade premium to FOB NE Asia prices extends slide.· Narrow premium points to still-muted demand, curbs attraction of moving more supplies to India.· Arbitrage stays hard to work for light/heavy grades even with gradual removal of surplus stocks that built up in April-May 2024.· Stocks dwindle after India’s base oils and lube demand lags base oils supply in June 2024 for first time in three months.· Excluding imports of very-light-grade base oils, the supply shortfall in June 2024 grows to widest in seventeen months..· Lower stocks, a seasonal pick-up in lube demand from end-Q3 2024, and plant maintenance in South Korea around the same time, provide various spurs to support pick-up in demand.· Expectations of sufficient supplies and lower prices likely continue to incentivize some buyers to hold back or to procure steady volumes more regularly.· Singapore’s base oils exports to India rebound in July 2024, even with the narrow gap between FOB Asia and CFR India prices.· Shipments to India from other sources like Taiwan and South Korea also show signs of rising in July 2024.· Dynamic points to steady buying even with the narrow gap between FOB Asia and CFR India prices..· Pakistan’s base oils imports hold firm in June 2024 as surge in shipments from US cushion lower-than-usual volumes from South Korea and Singapore.· South Korea and Singapore account for more than 75% of Pakistan’s base oils imports in 2022 and 2023..· Group II heavy grades account for at least 50% of Pakistan’s imports in 2023 and H1 2024.· Growing base oils self-sufficiency in major markets like China and India boost importance of outlets like Pakistan for suppliers like South Korea and Singapore.· Any extension of flows from US to Pakistan would add to competition for a key market for Group II heavy-grade base oils.· Pakistan’s lube demand rises in Q2 2024 for third time in four quarters..· Firmer lube demand coincides with stronger industrial activity, rising car sales, adding to the country’s attraction for overseas base oils suppliers..India’s June base oils supply lags demand.Pakistan’s June base oils supply stays higher
