· Asia base oils price premium to feedstock/competing fuel prices stays high even after sharp drop in past week.· Still-firm margins incentivize regional refiners to maintain or raise production levels.· Any extension of sharp drop in margins could start to change that incentive.· Arbitrage to move cargoes from US to Asia stays hard to work even with recent dip in US prices.· More supplies move from US to India in Oct 2024, even with hard-to-work arbitrage.· More supplies move from South Korea to Latin America in recent weeks.· Flow of any additional arbitrage shipments from Asia to Latin America is likely to ebb amid less feasible arbitrage. · South Korea’s base oils output likely to be lower in Sept 2024 and especially Oct 2024 because of scheduled plant maintenance work..· Impact of lower output could be cushioned after Asia’s base oils exports extend sharp rise in Aug 2024 to second-highest level in seventeen months..· Exports rise even amid signs of drop in region’s base oils output in Aug 2024.· Dynamic would leave refiners with more depleted supplies and blenders with replenished stocks.· Asia’s base oils prices hold firm throughout Aug 2024 even with rise in exports.· Firm prices suggest demand was strong enough to absorb the shipments.· Blenders’ higher stocks, and prospect of seasonal slowdown in demand, likely to curb impact of drop in supply caused by maintenance work at several plants in the region..· Singapore’s base oils exports over last four weeks pause at higher, more typical levels after drop in shipments in Aug 2024..· Larger-than-usual flow of shipments from Europe to Singapore shows signs of continuing, with another large cargo expected to arrive in early Nov 2024. .· Japan’s base oils supply and exports likely to stay lower than usual because of extended plant shutdown.· Japan’s base oils output falls in Aug 2024 to lowest since end-2021..· Drop in output cuts further the country’s availability of supplies for overseas markets.· Japan’s base oils exports to southeast Asia fall by 60% in Aug 2024 and for eleventh month from year-earlier levels..· Dynamic leaves that region facing increasingly tight Group I base oils supply, while firm marine lube consumption supports strong Group I demand..· China’s paraffinic base oils output rises in Sept 2024 close to highest since end-2021..· Output surges following restart of several Group II units.· Rising domestic base oils output should cover more of China’s domestic base oils requirements, curbing need for imports.· Any such dynamic could free up more shipments from markets like Taiwan to move to outlets like southeast Asia.· Current price levels sustain attraction of moving more shipments to China.· Extension of that trend would point to firmer demand in China, curbing prospect of pick-up in surplus volumes to other outlets from markets like Taiwan..· Taiwan’s base oils exports show signs of falling in Sept 2024 from previous two months.· Any pick-up in exports in Oct 2024 could be more muted as adverse weather delays cargo loadings at beginning of the month..China’s Sept base oils output rises.Japan’s August base oils output falls.Asia base oils demand outlook: Week of 7 Oct
· Asia base oils price premium to feedstock/competing fuel prices stays high even after sharp drop in past week.· Still-firm margins incentivize regional refiners to maintain or raise production levels.· Any extension of sharp drop in margins could start to change that incentive.· Arbitrage to move cargoes from US to Asia stays hard to work even with recent dip in US prices.· More supplies move from US to India in Oct 2024, even with hard-to-work arbitrage.· More supplies move from South Korea to Latin America in recent weeks.· Flow of any additional arbitrage shipments from Asia to Latin America is likely to ebb amid less feasible arbitrage. · South Korea’s base oils output likely to be lower in Sept 2024 and especially Oct 2024 because of scheduled plant maintenance work..· Impact of lower output could be cushioned after Asia’s base oils exports extend sharp rise in Aug 2024 to second-highest level in seventeen months..· Exports rise even amid signs of drop in region’s base oils output in Aug 2024.· Dynamic would leave refiners with more depleted supplies and blenders with replenished stocks.· Asia’s base oils prices hold firm throughout Aug 2024 even with rise in exports.· Firm prices suggest demand was strong enough to absorb the shipments.· Blenders’ higher stocks, and prospect of seasonal slowdown in demand, likely to curb impact of drop in supply caused by maintenance work at several plants in the region..· Singapore’s base oils exports over last four weeks pause at higher, more typical levels after drop in shipments in Aug 2024..· Larger-than-usual flow of shipments from Europe to Singapore shows signs of continuing, with another large cargo expected to arrive in early Nov 2024. .· Japan’s base oils supply and exports likely to stay lower than usual because of extended plant shutdown.· Japan’s base oils output falls in Aug 2024 to lowest since end-2021..· Drop in output cuts further the country’s availability of supplies for overseas markets.· Japan’s base oils exports to southeast Asia fall by 60% in Aug 2024 and for eleventh month from year-earlier levels..· Dynamic leaves that region facing increasingly tight Group I base oils supply, while firm marine lube consumption supports strong Group I demand..· China’s paraffinic base oils output rises in Sept 2024 close to highest since end-2021..· Output surges following restart of several Group II units.· Rising domestic base oils output should cover more of China’s domestic base oils requirements, curbing need for imports.· Any such dynamic could free up more shipments from markets like Taiwan to move to outlets like southeast Asia.· Current price levels sustain attraction of moving more shipments to China.· Extension of that trend would point to firmer demand in China, curbing prospect of pick-up in surplus volumes to other outlets from markets like Taiwan..· Taiwan’s base oils exports show signs of falling in Sept 2024 from previous two months.· Any pick-up in exports in Oct 2024 could be more muted as adverse weather delays cargo loadings at beginning of the month..China’s Sept base oils output rises.Japan’s August base oils output falls.Asia base oils demand outlook: Week of 7 Oct