· Asia’s base oils supply likely to stay balanced for next few weeks and at least until restart of Taiwan’s Group II unit.· Supply stays balanced despite more limited arbitrage shipments to more distant markets.· Fob Asia Group II price discount to Europe prices widens in recent weeks.· Wider discount facilitates arbitrage opportunities, especially for heavy grades, and points to availability of some surplus supplies vs few weeks earlier.· Less feasible arbitrage to Americas markets adds to attraction of eyeing arb opportunities in markets like Mideast Gulf and Europe, especially if more surplus supplies are available.· Signs of pick-up in flows from US to India could add to availability of surplus supplies in Asia.· Flow of base oils exports from China show signs of staying lower than at start of Q4 2023.· Asia’s Group III supply likely to tighten in Q1 2024 amid round of maintenance work affecting several plants..· South Korea’s October base oils exports to India rise to twenty-five month high..· Shipments absorb most of South Korea’s surge in total exports in Oct 2023.· Shipments more than cover for drop in flows from Taiwan to India in Q4 2023.· Shipments highlight India’s strong demand for Group II and Group III base oils.· Shipments highlight competition that US suppliers face to tap arbitrage to move cargoes to India.· Shipments also highlight repercussions of any slowdown in India’s demand for Group II and Group III base oils as country’s domestic production capacity of the grades starts to rise.· Wave of shipments from South Korea likely to trigger rise in India’s total imports in Nov 2023.· South Korea’s exports to India show signs of staying higher than usual in Nov 2023, even if down from previous month..· South Korea’s base oils exports to southeast Asia fall to ten-month low on dip in shipments to Indonesia..· Fall in shipments likely reflects more the impact of rising supplies from Singapore to Indonesia, rather than weaker Indonesian demand.· Trend highlights competition for outlets in southeast Asia, especially in the face of slowing demand from China.· Trend puts pressure on South Korean supplies to find alternative outlets..· Singapore’s steady base oils imports in Oct 2023 mask marked change in source of the supplies..· Singapore’s imports from Italy and US surge to two-year high in Oct 2023, following pause or low volumes from both markets in the intervening period.· Rise in shipments from Italy especially likely to continue as Singapore lines up alternative supplies following closure of Group I plant in Japan in Oct 2023.· Japan had been one of Singapore’s largest suppliers in recent years..· Singapore’s base oils imports from Japan halt so far in Nov 2023..· Pause in shipments highlights need to line up alternative supply sources..· Another cargo of US origin set to reach India in coming week.· Shipment would add to India's imports arriving from US in Nov 2023 amid sign of gradual pick-up in arbitrage shipments from US.· Rise in shipments suggests cargoes are being lined up at discounted price levels to make arbitrage feasible.· Prospect of more surplus light-grade supplies in US at end-2023 and early 2024 raises likelihood of additional shipments being lined up to move to India.· Any such trend would coincide with likely-revival in Group II shipments from Taiwan over coming month..Asia base oils - week of Nov 27: Demand outlook
· Asia’s base oils supply likely to stay balanced for next few weeks and at least until restart of Taiwan’s Group II unit.· Supply stays balanced despite more limited arbitrage shipments to more distant markets.· Fob Asia Group II price discount to Europe prices widens in recent weeks.· Wider discount facilitates arbitrage opportunities, especially for heavy grades, and points to availability of some surplus supplies vs few weeks earlier.· Less feasible arbitrage to Americas markets adds to attraction of eyeing arb opportunities in markets like Mideast Gulf and Europe, especially if more surplus supplies are available.· Signs of pick-up in flows from US to India could add to availability of surplus supplies in Asia.· Flow of base oils exports from China show signs of staying lower than at start of Q4 2023.· Asia’s Group III supply likely to tighten in Q1 2024 amid round of maintenance work affecting several plants..· South Korea’s October base oils exports to India rise to twenty-five month high..· Shipments absorb most of South Korea’s surge in total exports in Oct 2023.· Shipments more than cover for drop in flows from Taiwan to India in Q4 2023.· Shipments highlight India’s strong demand for Group II and Group III base oils.· Shipments highlight competition that US suppliers face to tap arbitrage to move cargoes to India.· Shipments also highlight repercussions of any slowdown in India’s demand for Group II and Group III base oils as country’s domestic production capacity of the grades starts to rise.· Wave of shipments from South Korea likely to trigger rise in India’s total imports in Nov 2023.· South Korea’s exports to India show signs of staying higher than usual in Nov 2023, even if down from previous month..· South Korea’s base oils exports to southeast Asia fall to ten-month low on dip in shipments to Indonesia..· Fall in shipments likely reflects more the impact of rising supplies from Singapore to Indonesia, rather than weaker Indonesian demand.· Trend highlights competition for outlets in southeast Asia, especially in the face of slowing demand from China.· Trend puts pressure on South Korean supplies to find alternative outlets..· Singapore’s steady base oils imports in Oct 2023 mask marked change in source of the supplies..· Singapore’s imports from Italy and US surge to two-year high in Oct 2023, following pause or low volumes from both markets in the intervening period.· Rise in shipments from Italy especially likely to continue as Singapore lines up alternative supplies following closure of Group I plant in Japan in Oct 2023.· Japan had been one of Singapore’s largest suppliers in recent years..· Singapore’s base oils imports from Japan halt so far in Nov 2023..· Pause in shipments highlights need to line up alternative supply sources..· Another cargo of US origin set to reach India in coming week.· Shipment would add to India's imports arriving from US in Nov 2023 amid sign of gradual pick-up in arbitrage shipments from US.· Rise in shipments suggests cargoes are being lined up at discounted price levels to make arbitrage feasible.· Prospect of more surplus light-grade supplies in US at end-2023 and early 2024 raises likelihood of additional shipments being lined up to move to India.· Any such trend would coincide with likely-revival in Group II shipments from Taiwan over coming month..Asia base oils - week of Nov 27: Demand outlook