· Asia’s Group I base oils supply likely to remain tight amid more extensive-than-expected plant maintenance in southeast Asia in Q1 2024.· Maintenance set to be followed by plant maintenance work in China later in Q1 2024, adding to structural drop in regional supply.· Asia’s Group I prices hold firm versus gasoil, contrasting with recent weakness of Group II prices versus gasoil.· Trend highlight relative tightness of Group I supplies and more plentiful availability of Group II supplies.· Plant maintenance also affects several Group III plants in Asia in Q1 2024.· Asia’s Group III price premium to Group II prices rises to highest in more than four months, coincides with signs of tighter supply dynamics vs Group II base oils.· China’s firm Group II prices vs diesel and vs fob Asia prices raise prospect of pick-up in domestic supply.· Domestic market would need sustained seasonal rise in demand after lunar new year holidays to avoid supply-build..· Plant maintenance in Q4 2023 was key factor behind fall in Taiwan’s base oils exports in 2023..· Lack of any scheduled plant maintenance in 2024 raises prospect of rebound in Taiwan’s base oils exports this year.· Any such rise in exports raises risk of larger regional supply-build and subsequent pressure on prices.· Lack of announced scheduled Group II plant maintenance work so far this year in Asia puts onus on refiners to adjust production more sharply to avoid a large supply-build. · Signs of some such moves coincide with weaker regional base oils values vs competing fuel/feedstock prices..· Taiwan’s December base oils exports to southeast Asia and India exceed shipments to China for fourth month..· Trend reflects structural shift in flows to other markets instead of China.· Trend likely to continue through most of 2024 amid expectations that China’s domestic supply will cover most of any recovery in demand..· South Korea’s 2023 base oils exports fall to eight-year low..· Lower exports follow plant maintenance and run-cuts.· Size and extended period of drop in exports points to more extended run-cuts or structural changes that cut capacity.· Drop in exports helps to counter slowdown in Chinese demand, leaving Asia’s supply-demand fundamentals more balanced in 2023.· Exports may need to remain at lower levels again this year to avoid rise in surplus supplies..· India’s December base oils imports stay high even with slowdown in arbitrage shipments from US..· Trend highlights plentiful availability and competition for India market even with slowdown in US supplies.· Trend highlights likely widespread repercussions of any slowdown in India’s requirements for overseas supplies..· Singapore’s base oils imports stay unusually low in recent weeks amid sustained pause/slowdown in shipments from Japan and China..· Slowdown in shipments raises prospect of Singapore facing more volatile supplies this year amid growing reliance on more distant sources like Europe.· An alternative could be for Singapore to boost domestic output to cover more domestic and regional requirements..· Asia accounts for growing share of base oils shipments from Qatar in November and in 2023, contrasting with steady or lower share for Europe and US..· Rising flow of shipments to Asia could reflect moves to avoid adding to oversupply in US and Europe, where demand was weak and Group III prices already faced sustained pressure..Asia base oils - week of Jan 22: Demand outlook.Global base oils - week of Jan 22: Demand outlook.Global base oils - week of Jan 22: Price outlook - margins.Global base oils - week of Jan 22: Price outlook - arbitrage
· Asia’s Group I base oils supply likely to remain tight amid more extensive-than-expected plant maintenance in southeast Asia in Q1 2024.· Maintenance set to be followed by plant maintenance work in China later in Q1 2024, adding to structural drop in regional supply.· Asia’s Group I prices hold firm versus gasoil, contrasting with recent weakness of Group II prices versus gasoil.· Trend highlight relative tightness of Group I supplies and more plentiful availability of Group II supplies.· Plant maintenance also affects several Group III plants in Asia in Q1 2024.· Asia’s Group III price premium to Group II prices rises to highest in more than four months, coincides with signs of tighter supply dynamics vs Group II base oils.· China’s firm Group II prices vs diesel and vs fob Asia prices raise prospect of pick-up in domestic supply.· Domestic market would need sustained seasonal rise in demand after lunar new year holidays to avoid supply-build..· Plant maintenance in Q4 2023 was key factor behind fall in Taiwan’s base oils exports in 2023..· Lack of any scheduled plant maintenance in 2024 raises prospect of rebound in Taiwan’s base oils exports this year.· Any such rise in exports raises risk of larger regional supply-build and subsequent pressure on prices.· Lack of announced scheduled Group II plant maintenance work so far this year in Asia puts onus on refiners to adjust production more sharply to avoid a large supply-build. · Signs of some such moves coincide with weaker regional base oils values vs competing fuel/feedstock prices..· Taiwan’s December base oils exports to southeast Asia and India exceed shipments to China for fourth month..· Trend reflects structural shift in flows to other markets instead of China.· Trend likely to continue through most of 2024 amid expectations that China’s domestic supply will cover most of any recovery in demand..· South Korea’s 2023 base oils exports fall to eight-year low..· Lower exports follow plant maintenance and run-cuts.· Size and extended period of drop in exports points to more extended run-cuts or structural changes that cut capacity.· Drop in exports helps to counter slowdown in Chinese demand, leaving Asia’s supply-demand fundamentals more balanced in 2023.· Exports may need to remain at lower levels again this year to avoid rise in surplus supplies..· India’s December base oils imports stay high even with slowdown in arbitrage shipments from US..· Trend highlights plentiful availability and competition for India market even with slowdown in US supplies.· Trend highlights likely widespread repercussions of any slowdown in India’s requirements for overseas supplies..· Singapore’s base oils imports stay unusually low in recent weeks amid sustained pause/slowdown in shipments from Japan and China..· Slowdown in shipments raises prospect of Singapore facing more volatile supplies this year amid growing reliance on more distant sources like Europe.· An alternative could be for Singapore to boost domestic output to cover more domestic and regional requirements..· Asia accounts for growing share of base oils shipments from Qatar in November and in 2023, contrasting with steady or lower share for Europe and US..· Rising flow of shipments to Asia could reflect moves to avoid adding to oversupply in US and Europe, where demand was weak and Group III prices already faced sustained pressure..Asia base oils - week of Jan 22: Demand outlook.Global base oils - week of Jan 22: Demand outlook.Global base oils - week of Jan 22: Price outlook - margins.Global base oils - week of Jan 22: Price outlook - arbitrage