· Asia’s base oils demand could get support from round of stock-replenishment after seasonal rise in lube consumption in month of March.· Prospect of sufficient supply, more muted demand in Q2 2024, and higher prices could curb buyers’ urgency to replenish stocks. · Those factors, combined with less competitive US prices, could curb Asia’s demand for arbitrage shipments from US.· FOB NE Asia Group II N500 prices continue to strengthen vs Group I SN 500 and Group III 8cSt base oils prices.· Trend could incentivize buyers to seek to use alternative supplies instead of Group II N500.· China’s domestic Group II base oils prices fall vs diesel and vs FOB NE Asia prices.· Lower premium curbs incentive both for domestic refiners to raise output and for domestic buyers to seek additional supplies from within the region.· Lower incentive for additional supplies points to cautious, muted demand.· Trend incentivizes Asia’s refiners to continue to focus on moving more supplies to other markets instead.· China’s domestic Group I light/heavy-neutrals base oils prices extend rise vs domestic Group II prices and vs FOB Asia Group I prices.· Firmer price premium reflects China’s tighter Group I supply fundamentals, coincides with Group I plant maintenance in the country.· Singapore takes delivery of more supplies from China last week, extending steady flow of shipments from that market.· Steady flows point to sufficient surplus supply in China and sufficiently low domestic prices to sustain the attraction of lining up shipments to move to overseas markets..· India’s March lube demand rises to one-year high, before likely slowdown at start of Q2 2024..· Higher demand likely outweighs supply in March 2024, triggering need for Indian buyers to replenish stocks.· Prospect of pick-up in arrival of shipments from South Korea and US in April 2024, and signs of steady flows from Saudi Arabia, likely to boost buyers’ inventories.· Buyers' higher stocks, and prospect of steadier lube demand over coming months, curb pressure to add to inventories at a time when prices continue to trend upwards.· Expectation of healthy availability of supply curbs further any urgency to build larger stocks, instead incentivizes blenders to procure supplies as and when required..· Asia’s February lube demand falls for first time in four months; slowdown may partly reflect timing of lunar new year holidays, which fell in month of February this year..· Asia’s February lube demand falls less steeply than fall in region’s base oils supply, triggering drop in surplus of supply over demand to lowest level in seven months..· Small surplus in Feb 2024 curbs volume of arbitrage supplies available for shipment from Asia to more distant markets in Q1 2024.· Small surplus precedes seasonal rise in demand in the month of March, raising prospect of leaving refiners and blenders with balanced-to-low supplies at start of Q2 2024.· More balanced fundamentals at start of Q2 2024 would give refiners more leverage to avoid large build-up of surplus supplies if they were to adjust output levels in response to slowdown in demand.· Prospect of seasonal slowdown in demand at start of Q2 2024 could curb blenders’ urgency to replenish depleted stocks.· Rising prices and expectations of sufficient supply add to attraction of maintaining lower stocks..Asia base oils supply outlook: Week of April 8
· Asia’s base oils demand could get support from round of stock-replenishment after seasonal rise in lube consumption in month of March.· Prospect of sufficient supply, more muted demand in Q2 2024, and higher prices could curb buyers’ urgency to replenish stocks. · Those factors, combined with less competitive US prices, could curb Asia’s demand for arbitrage shipments from US.· FOB NE Asia Group II N500 prices continue to strengthen vs Group I SN 500 and Group III 8cSt base oils prices.· Trend could incentivize buyers to seek to use alternative supplies instead of Group II N500.· China’s domestic Group II base oils prices fall vs diesel and vs FOB NE Asia prices.· Lower premium curbs incentive both for domestic refiners to raise output and for domestic buyers to seek additional supplies from within the region.· Lower incentive for additional supplies points to cautious, muted demand.· Trend incentivizes Asia’s refiners to continue to focus on moving more supplies to other markets instead.· China’s domestic Group I light/heavy-neutrals base oils prices extend rise vs domestic Group II prices and vs FOB Asia Group I prices.· Firmer price premium reflects China’s tighter Group I supply fundamentals, coincides with Group I plant maintenance in the country.· Singapore takes delivery of more supplies from China last week, extending steady flow of shipments from that market.· Steady flows point to sufficient surplus supply in China and sufficiently low domestic prices to sustain the attraction of lining up shipments to move to overseas markets..· India’s March lube demand rises to one-year high, before likely slowdown at start of Q2 2024..· Higher demand likely outweighs supply in March 2024, triggering need for Indian buyers to replenish stocks.· Prospect of pick-up in arrival of shipments from South Korea and US in April 2024, and signs of steady flows from Saudi Arabia, likely to boost buyers’ inventories.· Buyers' higher stocks, and prospect of steadier lube demand over coming months, curb pressure to add to inventories at a time when prices continue to trend upwards.· Expectation of healthy availability of supply curbs further any urgency to build larger stocks, instead incentivizes blenders to procure supplies as and when required..· Asia’s February lube demand falls for first time in four months; slowdown may partly reflect timing of lunar new year holidays, which fell in month of February this year..· Asia’s February lube demand falls less steeply than fall in region’s base oils supply, triggering drop in surplus of supply over demand to lowest level in seven months..· Small surplus in Feb 2024 curbs volume of arbitrage supplies available for shipment from Asia to more distant markets in Q1 2024.· Small surplus precedes seasonal rise in demand in the month of March, raising prospect of leaving refiners and blenders with balanced-to-low supplies at start of Q2 2024.· More balanced fundamentals at start of Q2 2024 would give refiners more leverage to avoid large build-up of surplus supplies if they were to adjust output levels in response to slowdown in demand.· Prospect of seasonal slowdown in demand at start of Q2 2024 could curb blenders’ urgency to replenish depleted stocks.· Rising prices and expectations of sufficient supply add to attraction of maintaining lower stocks..Asia base oils supply outlook: Week of April 8