Asia base oils – week of April 3: Supply outlook

·        China’s Shandong province diesel premium to crude falls, holds well below 2H 2022 levels.

·        India’s retail diesel premium to discounted crude stays unusually high, incentivizing refiners to maximise run rates.

·        Base oils plant maintenance work to gather pace in Europe, Asia in Q2 2023, slow down in US.

·        Maintenance in Asia in Q2 2023 includes work on plants in South Korea, Japan, China.

·        China’s domestic base oils supply shows signs of staying unusually low.

·        Singapore’s base oils exports from domestic producers fall sharply in 2H March, after surging in 1H March.

·        Volatile export volumes coincide with planned start of scheduled plant maintenance in Singapore in month of March, point to moves to boost buyers’ stocks ahead of maintenance.

·        Singapore’s base oils imports fall in last four weeks to six-month low.

·        Slowdown reflects reliance on steady flows from Japan and China to sustain steady imports.

·        Supplies from China to Singapore could stay lower as domestic demand revives.

·        Supplies from Japan to Singapore likely to stay lower, with round of scheduled plant maintenance set to begin in April.

·        Asia-Pacific Group I supply already tightens in February on maintenance work, lower output in Thailand, Japan, Indonesia.

·        Singapore’s February base oils exports to southeast Asia rise to seven-month high, suggesting its supply is sufficient to cover firm demand in the region and in China simultaneously.

·        Thailand’s February base oils output falls to three-month low after slump in margins the previous month.

·        Rebounding margins since early February and firm demand incentivize Thai refiners to raise output in March.

·        Plant maintenance work cuts India’s February base oils output to six-month low. Volume remains high, giving buyers more supply options.