· Europe/US gasoil prices extend fall relative to crude to lowest in almost a year.· Diesel premium to crude remains higher than historical levels. But falling premium boosts attraction of producing other products like base oils.· India’s domestic retail diesel premium to crude holds firm, especially so with crude at $30/bl discount – incentivizing refiners to maximise run rates..· China’s Shandong province diesel premium to crude falls back, holds at Dec-Jan levels.· China’s diesel demand likely to extend recovery as factories resume normal operations after lunar new year holidays.· Rising Chinese diesel demand, firmer prices would boost refiners’ incentive to focus on middle distillates production.· Focus on diesel production coincides with several base oils plant shutdowns in China.· US, Japan, China Shandong province refinery run rates stay high amid still-firm products margins.· US weekly distillate stocks rise last week to highest in almost a year, fall year-on-year a slowest pace in almost two years..· Slump in US’ December base oils exports highlights smaller-than-usual surplus at end-2022, cuts availability for other regions.· Fall in US exports at year-end coincides with and magnifies impact of drop in Asia-Pacific supplies.· Fall in US exports comes ahead of extended plant maintenance work in US from 2H January.· US’ December base oils exports to Europe fall to lowest since 2013..· Fall in US supplies coincides with slowdown then halt in Russian base oils shipments to Europe from early February.· Any regional supply tightness will become more apparent when European blenders seek to replenish stocks.· Difficulty to hedge incentivizes refiners to keep clearing surplus supplies rather than build stocks.· Drop in Russian supplies to Europe likely to cut European surplus for export to markets like Nigeria.· Russian supplies previously provided additional supplies to European market during maintenance work/seasonal rise in demand. Now they won’t.· South Korea’s December base oils output rises to seven-month high, raising prospect of pick-up in exports in early 2023 to meet seasonal pick-up in demand.· Indonesia’s Group I base oils exports stay low throughout 2H 2022, unlikely to rise significantly in Q1 2023 at time of year when regional demand for its supplies typically peaks.· Slump in Asia’s Q4 base oils exports to lowest since 1H 2020 contrasts with firmer Q4 shipments in recent years..· Those firm shipments had given blenders the opportunity to start replenishing stocks early ahead of peak demand season in Q1-Q2.· Fall in Asia’s Q4 exports prevented blenders from building stocks early, squeezing round of stock-building into shorter time period in Q1 2023.· Round of stock building will require rise in Asia-Pacific supplies and likely to overlap with round of plant maintenance work.· Singapore’s base oils exports to China hold consistently at higher level in recent weeks than throughout most of 2022.· Singapore’s base oils exports to Indonesia stay high in first few weeks of 2023, even with rise in shipments to China.· Singapore’s base oils imports from Japan rise in early 2023 after falling in last two months of 2022.· Singapore continues to take delivery of steady flow of shipments from China in 2023.· India’s January base oils exports fall to lowest in more than two years, even with plentiful domestic supply.· Taiwan’s January base oils exports show signs of rebounding from December, with swathe of shipments to southeast Asia contrasting with slowdown in cargoes to China..Global base oils - week of Feb 13: Demand outlook
· Europe/US gasoil prices extend fall relative to crude to lowest in almost a year.· Diesel premium to crude remains higher than historical levels. But falling premium boosts attraction of producing other products like base oils.· India’s domestic retail diesel premium to crude holds firm, especially so with crude at $30/bl discount – incentivizing refiners to maximise run rates..· China’s Shandong province diesel premium to crude falls back, holds at Dec-Jan levels.· China’s diesel demand likely to extend recovery as factories resume normal operations after lunar new year holidays.· Rising Chinese diesel demand, firmer prices would boost refiners’ incentive to focus on middle distillates production.· Focus on diesel production coincides with several base oils plant shutdowns in China.· US, Japan, China Shandong province refinery run rates stay high amid still-firm products margins.· US weekly distillate stocks rise last week to highest in almost a year, fall year-on-year a slowest pace in almost two years..· Slump in US’ December base oils exports highlights smaller-than-usual surplus at end-2022, cuts availability for other regions.· Fall in US exports at year-end coincides with and magnifies impact of drop in Asia-Pacific supplies.· Fall in US exports comes ahead of extended plant maintenance work in US from 2H January.· US’ December base oils exports to Europe fall to lowest since 2013..· Fall in US supplies coincides with slowdown then halt in Russian base oils shipments to Europe from early February.· Any regional supply tightness will become more apparent when European blenders seek to replenish stocks.· Difficulty to hedge incentivizes refiners to keep clearing surplus supplies rather than build stocks.· Drop in Russian supplies to Europe likely to cut European surplus for export to markets like Nigeria.· Russian supplies previously provided additional supplies to European market during maintenance work/seasonal rise in demand. Now they won’t.· South Korea’s December base oils output rises to seven-month high, raising prospect of pick-up in exports in early 2023 to meet seasonal pick-up in demand.· Indonesia’s Group I base oils exports stay low throughout 2H 2022, unlikely to rise significantly in Q1 2023 at time of year when regional demand for its supplies typically peaks.· Slump in Asia’s Q4 base oils exports to lowest since 1H 2020 contrasts with firmer Q4 shipments in recent years..· Those firm shipments had given blenders the opportunity to start replenishing stocks early ahead of peak demand season in Q1-Q2.· Fall in Asia’s Q4 exports prevented blenders from building stocks early, squeezing round of stock-building into shorter time period in Q1 2023.· Round of stock building will require rise in Asia-Pacific supplies and likely to overlap with round of plant maintenance work.· Singapore’s base oils exports to China hold consistently at higher level in recent weeks than throughout most of 2022.· Singapore’s base oils exports to Indonesia stay high in first few weeks of 2023, even with rise in shipments to China.· Singapore’s base oils imports from Japan rise in early 2023 after falling in last two months of 2022.· Singapore continues to take delivery of steady flow of shipments from China in 2023.· India’s January base oils exports fall to lowest in more than two years, even with plentiful domestic supply.· Taiwan’s January base oils exports show signs of rebounding from December, with swathe of shipments to southeast Asia contrasting with slowdown in cargoes to China..Global base oils - week of Feb 13: Demand outlook