· India’s imported base oil cargo prices lag the rise in US export prices in recent weeks, ICIS data shows.· Trend closes key arbitrage throughout mid-2023, when wave of US supplies moved to India.· India’s lagging import prices versus US base oils prices point to sufficient supply in Asia and Mideast Gulf to cover requirements in India over coming months.· India’s Group II light-grade base oils prices fall in October to widest discount to US export prices since Jan 2023..· Less feasible arbitrage contrasts with surge in US shipments to India in Q2-Q3 2023.· Wave of US shipments to India coincides with and help to cover for drop in supplies from South Korea to India, especially in Q2-Q3 2023..· South Korea’s base oils output recovers in July and especially August following completion of plant maintenance. Higher output raises prospect of pick-up in exports..· India likely to be a more attractive outlet than China for any such pick-up in South Korea’s base oils exports.· China’s domestic Group II prices stay unusually weak versus rising fob Asia cargo prices through September, curbing incentive to move supplies to China..· India’s imported base oil cargo prices keep pace with rising fob Asia cargo prices through September, even as they weaken versus US prices..· Steady premium of India’s imported cargo prices to fob Asia prices maintains feasibility of moving more supplies from Asia to India.· More feasible arbitrage provides outlet for South Korea’s rising supply.· Any rise in supplies from Asia markets like South Korea to India would cushion impact of weak Chinese demand.· Any rise in supplies from Asia markets like South Korea to India would cover for slowdown in India’s shipments from US.· Closed arbitrage from US to India in turn increases importance for US refiners to maintain open arbitrage to outlets like Mexico..Global base oils - week of Oct 9: Price outlook - margins
· India’s imported base oil cargo prices lag the rise in US export prices in recent weeks, ICIS data shows.· Trend closes key arbitrage throughout mid-2023, when wave of US supplies moved to India.· India’s lagging import prices versus US base oils prices point to sufficient supply in Asia and Mideast Gulf to cover requirements in India over coming months.· India’s Group II light-grade base oils prices fall in October to widest discount to US export prices since Jan 2023..· Less feasible arbitrage contrasts with surge in US shipments to India in Q2-Q3 2023.· Wave of US shipments to India coincides with and help to cover for drop in supplies from South Korea to India, especially in Q2-Q3 2023..· South Korea’s base oils output recovers in July and especially August following completion of plant maintenance. Higher output raises prospect of pick-up in exports..· India likely to be a more attractive outlet than China for any such pick-up in South Korea’s base oils exports.· China’s domestic Group II prices stay unusually weak versus rising fob Asia cargo prices through September, curbing incentive to move supplies to China..· India’s imported base oil cargo prices keep pace with rising fob Asia cargo prices through September, even as they weaken versus US prices..· Steady premium of India’s imported cargo prices to fob Asia prices maintains feasibility of moving more supplies from Asia to India.· More feasible arbitrage provides outlet for South Korea’s rising supply.· Any rise in supplies from Asia markets like South Korea to India would cushion impact of weak Chinese demand.· Any rise in supplies from Asia markets like South Korea to India would cover for slowdown in India’s shipments from US.· Closed arbitrage from US to India in turn increases importance for US refiners to maintain open arbitrage to outlets like Mexico..Global base oils - week of Oct 9: Price outlook - margins