· Asia’s base oils demand shows signs of staying more muted, with buyers facing little urgency to build larger stocks.· Recent volatility of crude and diesel prices could add to buyers’ preference to hold back for now.· Demand for regional supplies could get support from prospect of slowdown in US arbitrage shipments to Asia.· Asia’s Group II heavy-grade price premium to light grades and to Group I SN500 extends rise, pointing to still-firm buying interest in the supplies.· China’s domestic Group II base oil price premium to FOB NE Asia prices continues to trend lower, complicating further the attraction of moving regional shipments to China.· CFR NE Asia Group II N150 prices move to discount to FOB NE Asia prices in April 2024 for first time this year, reflecting unworkable arbitrage.· Limited arbitrage opportunities suggest that China’s domestic supply is sufficient to cover buyers’ requirements.· China’s domestic Group II premium to Shandong diesel prices stays much lower than year-earlier levels, pointing to still-muted demand for domestic supplies.· China’s Group I light and heavy-neutrals prices extend strong rise vs diesel prices and FOB Asia prices, reflecting tighter supply-demand fundamentals for Group I base oils..· Singapore’s weekly base oils exports to China and India extend recovery since early April 2024, contrasting with slowdown in shipments to southeast Asia..· Signs of steadier flows to China mirror similar trend with shipments from Taiwan to China.· Trend points to steadier Chinese demand at lower levels from key regional suppliers. .· South Korea’s base oils exports to China fall in Q1 2024 to lowest level in more than a decade for first quarter of the year..· Trend highlights both China’s growing self-sufficiency and its more muted demand..· Buyers in India could prefer to hold back for now until crude prices stabilize.· India’s demand for very-light grades could ease after CFR India N70 premium to diesel rises to highest in nearly five months.· Higher premium could prompt buyers to hold back in anticipation of a price-adjustment by refiners to reflect the recent fall in gasoil prices.· Narrowing premium of CFR India Group II prices over FOB NE Asia prices and FOB USG export prices points to disconnect between buyers' and sellers’ price ideas, could reflect signs of weaker demand.· Any extension of trend raises prospect of slowdown in shipments to India and possibility of build-up of supplies in Asia.· India’s demand could still get support for supplies that are likely to reach the country before the month of July, when monsoon-related weather tends to have a larger impact on logistics. · India’s demand for supplies from Asia could get support from signs of growing volatility with shipments from other sources like US and Mideast Gulf.· Imports from the US are likely to rise in April 2024 after slumping the previous month..· The trend highlighted a characteristic of arbitrage shipments as well as the long voyage time for shipments from the US.· Higher US export prices in recent weeks raise the prospect of a further slowdown in shipments from that source.· Signs of more regular shipments from Saudi Arabia to India via the Red Sea raise the prospect of sustaining steady imports from that source.· India's March import volumes from Saudi Arabia were still lower than typical levels during 2023.· Uncertainty about the regularity and volume of supplies from markets like US and Saudi Arabia increase the importance and value of sources where there is more certainty over the availability of the supplies..· India’s lower imports of Group II heavy grades in March 2024 contrasts with pick-up in shipments of Group III 8cSt base oils and of Group I base oils..· Rising price of Group II heavy grades relative to Group I base oils and Group III 8cSt base oils since early this year boosts buyers’ incentive to procure alternatives instead of Group II N500.· Indian buyers show signs of responding to that incentive..Asia base oils supply outlook: Week of 15 April
· Asia’s base oils demand shows signs of staying more muted, with buyers facing little urgency to build larger stocks.· Recent volatility of crude and diesel prices could add to buyers’ preference to hold back for now.· Demand for regional supplies could get support from prospect of slowdown in US arbitrage shipments to Asia.· Asia’s Group II heavy-grade price premium to light grades and to Group I SN500 extends rise, pointing to still-firm buying interest in the supplies.· China’s domestic Group II base oil price premium to FOB NE Asia prices continues to trend lower, complicating further the attraction of moving regional shipments to China.· CFR NE Asia Group II N150 prices move to discount to FOB NE Asia prices in April 2024 for first time this year, reflecting unworkable arbitrage.· Limited arbitrage opportunities suggest that China’s domestic supply is sufficient to cover buyers’ requirements.· China’s domestic Group II premium to Shandong diesel prices stays much lower than year-earlier levels, pointing to still-muted demand for domestic supplies.· China’s Group I light and heavy-neutrals prices extend strong rise vs diesel prices and FOB Asia prices, reflecting tighter supply-demand fundamentals for Group I base oils..· Singapore’s weekly base oils exports to China and India extend recovery since early April 2024, contrasting with slowdown in shipments to southeast Asia..· Signs of steadier flows to China mirror similar trend with shipments from Taiwan to China.· Trend points to steadier Chinese demand at lower levels from key regional suppliers. .· South Korea’s base oils exports to China fall in Q1 2024 to lowest level in more than a decade for first quarter of the year..· Trend highlights both China’s growing self-sufficiency and its more muted demand..· Buyers in India could prefer to hold back for now until crude prices stabilize.· India’s demand for very-light grades could ease after CFR India N70 premium to diesel rises to highest in nearly five months.· Higher premium could prompt buyers to hold back in anticipation of a price-adjustment by refiners to reflect the recent fall in gasoil prices.· Narrowing premium of CFR India Group II prices over FOB NE Asia prices and FOB USG export prices points to disconnect between buyers' and sellers’ price ideas, could reflect signs of weaker demand.· Any extension of trend raises prospect of slowdown in shipments to India and possibility of build-up of supplies in Asia.· India’s demand could still get support for supplies that are likely to reach the country before the month of July, when monsoon-related weather tends to have a larger impact on logistics. · India’s demand for supplies from Asia could get support from signs of growing volatility with shipments from other sources like US and Mideast Gulf.· Imports from the US are likely to rise in April 2024 after slumping the previous month..· The trend highlighted a characteristic of arbitrage shipments as well as the long voyage time for shipments from the US.· Higher US export prices in recent weeks raise the prospect of a further slowdown in shipments from that source.· Signs of more regular shipments from Saudi Arabia to India via the Red Sea raise the prospect of sustaining steady imports from that source.· India's March import volumes from Saudi Arabia were still lower than typical levels during 2023.· Uncertainty about the regularity and volume of supplies from markets like US and Saudi Arabia increase the importance and value of sources where there is more certainty over the availability of the supplies..· India’s lower imports of Group II heavy grades in March 2024 contrasts with pick-up in shipments of Group III 8cSt base oils and of Group I base oils..· Rising price of Group II heavy grades relative to Group I base oils and Group III 8cSt base oils since early this year boosts buyers’ incentive to procure alternatives instead of Group II N500.· Indian buyers show signs of responding to that incentive..Asia base oils supply outlook: Week of 15 April