· Asia’s base oils supply likely to get support from firm margins, scant plant maintenance work over the coming months, and limited arbitrage opportunities.· Asia’s base oils prices extend rise versus regional diesel prices, boosting refiners’ incentive to increase output.· Refiners face growing incentive to raise output even amid less attractive arbitrage to key markets within Asia and to more distant markets.· Incentive to raise output, combined with less workable arbitrage opportunities, could trigger faster build-up of surplus volumes.· South Korea’s base oils exports in H1 May 2024 show signs of outpacing exports in H1 April 2024.· A pick-up in exports would follow restart of Group III base oils unit in South Korea in late-April 2024 following maintenance work.· Taiwan’s base oils exports pause since early May 2024, following signs of lower-than-usual volumes in April 2024.· Pause in shipments extends sharp slowdown in Taiwan’s exports to China since mid-April 2024.· Singapore’s base oils exports show signs of holding at firmer levels since early-April 2024, after slowdown in shipments in H2 March 2024..· China’s April paraffinic base oils output falls as Group I production dips to eight-month low..· Group I output likely to recover in May 2024 following expected completion of plant maintenance work at the beginning of the month.· China’s Group II supply could be getting support from Group III units whose specifications remain closer to Group II than Group III..· Thailand’s March base oils output rises to seven-month high following completion of plant maintenance work during Jan-Feb 2024..· Rise in production and year-on-year drop in Thailand’s domestic lube consumption triggers surge in surplus supply to eight-month high..· Rise in surplus supply raises prospect of pick-up in base oils exports in Q2 2024 to manage surplus.· Prospect of steady output at higher levels and seasonal slowdown in domestic consumption at start of Q2 2024 adds to pressure to clear surplus volumes to avoid a larger supply-build.· Singapore takes delivery of large volume of supplies from Thailand in early May 2024.· Volume exceeds Singapore's total imports from Thailand in each of the previous seven months.· Asia’s firm Group I base oils prices suggest regional supply remains tight even with improving availability of supply from Thailand..· Singapore takes delivery of another large cargo from the US in early May 2024.· Shipment extends strong pick-up in imports from the US since Feb 2024.· Extension of trend points to structural change that is less linked to arbitrage opportunities.· India’s base oils imports show signs of rising strongly in April 2024 as wave of arbitrage shipments arrive from growing number of sources.· India’s April imports include regular volumes from Saudi Arabia, with trend showing signs of continuing in May 2024.· Steady flows from Saudi Arabia curb buyers’ need to line up supplies from alternative sources like US..Asia base oils demand outlook: Week of 13 May
· Asia’s base oils supply likely to get support from firm margins, scant plant maintenance work over the coming months, and limited arbitrage opportunities.· Asia’s base oils prices extend rise versus regional diesel prices, boosting refiners’ incentive to increase output.· Refiners face growing incentive to raise output even amid less attractive arbitrage to key markets within Asia and to more distant markets.· Incentive to raise output, combined with less workable arbitrage opportunities, could trigger faster build-up of surplus volumes.· South Korea’s base oils exports in H1 May 2024 show signs of outpacing exports in H1 April 2024.· A pick-up in exports would follow restart of Group III base oils unit in South Korea in late-April 2024 following maintenance work.· Taiwan’s base oils exports pause since early May 2024, following signs of lower-than-usual volumes in April 2024.· Pause in shipments extends sharp slowdown in Taiwan’s exports to China since mid-April 2024.· Singapore’s base oils exports show signs of holding at firmer levels since early-April 2024, after slowdown in shipments in H2 March 2024..· China’s April paraffinic base oils output falls as Group I production dips to eight-month low..· Group I output likely to recover in May 2024 following expected completion of plant maintenance work at the beginning of the month.· China’s Group II supply could be getting support from Group III units whose specifications remain closer to Group II than Group III..· Thailand’s March base oils output rises to seven-month high following completion of plant maintenance work during Jan-Feb 2024..· Rise in production and year-on-year drop in Thailand’s domestic lube consumption triggers surge in surplus supply to eight-month high..· Rise in surplus supply raises prospect of pick-up in base oils exports in Q2 2024 to manage surplus.· Prospect of steady output at higher levels and seasonal slowdown in domestic consumption at start of Q2 2024 adds to pressure to clear surplus volumes to avoid a larger supply-build.· Singapore takes delivery of large volume of supplies from Thailand in early May 2024.· Volume exceeds Singapore's total imports from Thailand in each of the previous seven months.· Asia’s firm Group I base oils prices suggest regional supply remains tight even with improving availability of supply from Thailand..· Singapore takes delivery of another large cargo from the US in early May 2024.· Shipment extends strong pick-up in imports from the US since Feb 2024.· Extension of trend points to structural change that is less linked to arbitrage opportunities.· India’s base oils imports show signs of rising strongly in April 2024 as wave of arbitrage shipments arrive from growing number of sources.· India’s April imports include regular volumes from Saudi Arabia, with trend showing signs of continuing in May 2024.· Steady flows from Saudi Arabia curb buyers’ need to line up supplies from alternative sources like US..Asia base oils demand outlook: Week of 13 May