· China’s domestic Group I heavy-neutrals price premium to FOB Asia prices extends rise in Sept 2024 to highest in more than a year..· Rising premium makes more feasible the arbitrage to move Group I base oils from Asia to China.· More feasible arbitrage points to stronger supply-demand fundamentals in China’s domestic market.· More feasible arbitrage likely reflects more the prospect of tighter supply fundamentals because of planned permanent closure of key Group I base oils plant in China in Oct 2024.· More feasible arbitrage suggests domestic buyers will need top-up supplies of Group I base oils from regional markets even if outright demand continues to shrink.· Buyers’ requirements for top-up supplies would add to demand for shrinking regional supply of Group I base oils..· China’s domestic Group II light-grade price premium to FOB NE Asia prices extends rise in Sept 2024, holds close to highest since start of the year..· Higher premium makes more feasible the arbitrage to move Group II base oils from Asia to China.· More feasible arbitrage points to stronger supply-demand fundamentals in China’s domestic market..· More feasible arbitrage likely reflects impact of tighter supply fundamentals, with China’s Group II base oils output holding in lower, narrow range in three months to Aug 2024..· China’s domestic Group III price premium to FOB Asia prices falls in Sept 2024 to lowest since late-2022.· China’s domestic Group III price premium to FCA ARA 4cSt (low) base oils price falls in Sept 2024 to lowest since late-2023..· Narrowing premium makes less attractive the arbitrage to move Group III base oils from overseas markets to China.· Less attractive arbitrage points to weaker supply-demand fundamentals in China’s domestic market..· Less attractive arbitrage likely reflects impact of more plentiful supply, with China’s Group III base oils output rising to multi-year highs in three months to Aug 2024..· China’s domestic Group III base oils price premium to Group II price stays relatively wide through to start of Q3 2024, incentivizing domestic refiners to increase Group III output.· Changes in China’s Group I, Group II and Group III price premium to prices in other regions coincides with recent or upcoming changes in Group I, Group II and Group III supply in country’s domestic market.· Dynamic suggests that upcoming closure of Group I plant in China and any extension of focus on Group III production could have repercussions well beyond country’s domestic market.· Changes in supply show signs of providing more opportunities for overseas suppliers of Group I and Group II base oils, and fewer opportunities for suppliers of Group III base oils..China’s Aug base oils output edges up.Global base oils margins outlook: Week of 16 Sept.Asia base oils demand outlook: Week of 16 Sept.Asia base oils supply outlook: Week of 16 Sept
· China’s domestic Group I heavy-neutrals price premium to FOB Asia prices extends rise in Sept 2024 to highest in more than a year..· Rising premium makes more feasible the arbitrage to move Group I base oils from Asia to China.· More feasible arbitrage points to stronger supply-demand fundamentals in China’s domestic market.· More feasible arbitrage likely reflects more the prospect of tighter supply fundamentals because of planned permanent closure of key Group I base oils plant in China in Oct 2024.· More feasible arbitrage suggests domestic buyers will need top-up supplies of Group I base oils from regional markets even if outright demand continues to shrink.· Buyers’ requirements for top-up supplies would add to demand for shrinking regional supply of Group I base oils..· China’s domestic Group II light-grade price premium to FOB NE Asia prices extends rise in Sept 2024, holds close to highest since start of the year..· Higher premium makes more feasible the arbitrage to move Group II base oils from Asia to China.· More feasible arbitrage points to stronger supply-demand fundamentals in China’s domestic market..· More feasible arbitrage likely reflects impact of tighter supply fundamentals, with China’s Group II base oils output holding in lower, narrow range in three months to Aug 2024..· China’s domestic Group III price premium to FOB Asia prices falls in Sept 2024 to lowest since late-2022.· China’s domestic Group III price premium to FCA ARA 4cSt (low) base oils price falls in Sept 2024 to lowest since late-2023..· Narrowing premium makes less attractive the arbitrage to move Group III base oils from overseas markets to China.· Less attractive arbitrage points to weaker supply-demand fundamentals in China’s domestic market..· Less attractive arbitrage likely reflects impact of more plentiful supply, with China’s Group III base oils output rising to multi-year highs in three months to Aug 2024..· China’s domestic Group III base oils price premium to Group II price stays relatively wide through to start of Q3 2024, incentivizing domestic refiners to increase Group III output.· Changes in China’s Group I, Group II and Group III price premium to prices in other regions coincides with recent or upcoming changes in Group I, Group II and Group III supply in country’s domestic market.· Dynamic suggests that upcoming closure of Group I plant in China and any extension of focus on Group III production could have repercussions well beyond country’s domestic market.· Changes in supply show signs of providing more opportunities for overseas suppliers of Group I and Group II base oils, and fewer opportunities for suppliers of Group III base oils..China’s Aug base oils output edges up.Global base oils margins outlook: Week of 16 Sept.Asia base oils demand outlook: Week of 16 Sept.Asia base oils supply outlook: Week of 16 Sept
