· Asia’s Group I brightstock price premium to Singapore gasoil extends rises in Q1 2025 to highest since Q4 2021.· Asia’s Group II heavy-neutrals price premium to gasoil stays rangebound at high level since Q3 2024..· Price strength of brightstock and Group II N500 relative to gasoil and relative to other base oil grades incentivize refiners to increase supply of the heavy-grade base oils.· Outperformance of brightstock versus Group II N500 highlights difficulty of boosting brightstock output compared with N500..· Asia’s Group II N500 price rises to increasingly steep premium to Group II light grades and to Group I SN 500..· Sustained strength of Asia Group II heavy-grade prices incentivizes refiners to boost output of the product..· Taiwan’s Group II heavy-grade base oils exports surge in Jan-Feb 2025 as share of total shipments..· India’s Group II heavy-grade imports rise to eight-month high in Jan 2025 on rebound in shipments from markets like South Korea and Singapore, as well as US..· Rise in imports of Group I heavy neutrals also highlights buyers’ option of procuring more of those supplies in place of Group II heavy grades..· Rise in Pakistan’s Group II heavy-grade base oils imports in 2024, and rising share of those imports from US, free up additional supplies from other sources like South Korea..· Group II heavy-grade prices stay high even with rise in supply and alternative supply options.· Dynamic points to heavy-grade price-strength more because of rising demand than tight or falling supply.· Even so, range-bound Group II margins in recent months suggests that any supply-demand imbalance has stabilised.· Refiners’ ability to increase Group II supply contrasts with shrinking production capacity of Group I brightstock in Asia following wave of plant closures.· Structural tightness curbs refiners’ ability to raise brightstock output in response to higher margins.· Structural tightness in other regions curbs flow of arbitrage shipments to markets like India, increasing its reliance on supplies from Asia..· Dynamic points to brightstock price strength more because of tight or falling supply than because of rising demand.· Group II heavy-grade margins remain at elevated levels as higher demand sustains requirement for more supplies.· Steady demand would by contrast sustain requirements for sufficient rather than rising supplies.· Ongoing rise in Group I brightstock margins in recent months suggests that supply continues to lag relatively steady demand. · Any improvement in brightstock supply would help to meet that demand.· Brightstock margins would then require rising demand to mirror similar trend to Group II heavy-grade margins..Global base oils margins outlook: Week of 24 Feb.Asia base oils demand outlook: Week of 24 Feb.Asia base oils supply outlook: Week of 24 Feb.India’s January base oils imports rise
· Asia’s Group I brightstock price premium to Singapore gasoil extends rises in Q1 2025 to highest since Q4 2021.· Asia’s Group II heavy-neutrals price premium to gasoil stays rangebound at high level since Q3 2024..· Price strength of brightstock and Group II N500 relative to gasoil and relative to other base oil grades incentivize refiners to increase supply of the heavy-grade base oils.· Outperformance of brightstock versus Group II N500 highlights difficulty of boosting brightstock output compared with N500..· Asia’s Group II N500 price rises to increasingly steep premium to Group II light grades and to Group I SN 500..· Sustained strength of Asia Group II heavy-grade prices incentivizes refiners to boost output of the product..· Taiwan’s Group II heavy-grade base oils exports surge in Jan-Feb 2025 as share of total shipments..· India’s Group II heavy-grade imports rise to eight-month high in Jan 2025 on rebound in shipments from markets like South Korea and Singapore, as well as US..· Rise in imports of Group I heavy neutrals also highlights buyers’ option of procuring more of those supplies in place of Group II heavy grades..· Rise in Pakistan’s Group II heavy-grade base oils imports in 2024, and rising share of those imports from US, free up additional supplies from other sources like South Korea..· Group II heavy-grade prices stay high even with rise in supply and alternative supply options.· Dynamic points to heavy-grade price-strength more because of rising demand than tight or falling supply.· Even so, range-bound Group II margins in recent months suggests that any supply-demand imbalance has stabilised.· Refiners’ ability to increase Group II supply contrasts with shrinking production capacity of Group I brightstock in Asia following wave of plant closures.· Structural tightness curbs refiners’ ability to raise brightstock output in response to higher margins.· Structural tightness in other regions curbs flow of arbitrage shipments to markets like India, increasing its reliance on supplies from Asia..· Dynamic points to brightstock price strength more because of tight or falling supply than because of rising demand.· Group II heavy-grade margins remain at elevated levels as higher demand sustains requirement for more supplies.· Steady demand would by contrast sustain requirements for sufficient rather than rising supplies.· Ongoing rise in Group I brightstock margins in recent months suggests that supply continues to lag relatively steady demand. · Any improvement in brightstock supply would help to meet that demand.· Brightstock margins would then require rising demand to mirror similar trend to Group II heavy-grade margins..Global base oils margins outlook: Week of 24 Feb.Asia base oils demand outlook: Week of 24 Feb.Asia base oils supply outlook: Week of 24 Feb.India’s January base oils imports rise
