· Asia’s base oils demand likely to get support from seasonal pick-up in lube consumption over the coming weeks.
· Asia’s Group II heavy-grade prices maintain discount to Group I prices, boosting incentive to consume more Group II base oils.
· Group II discount to Group I shrinks to narrowest in more than two months, eroding that incentive.
· China’s firm domestic prices point to steady, but not surging demand.
· China’s domestic Group II light-grade base oils prices hold firm relative to competing fuels, contrasting with surge in premium to competing fuels the same time a year earlier.
· China’s domestic Group II light-grade prices continue to weaken vs fob Asia prices, stay well below year-earlier levels.
· China’s domestic Group II heavy-grade prices hold firmer vs fob Asia prices, stay well below year-earlier levels.
· Trend points to less feasible arbitrage opportunities vs year-earlier levels.
· Any opportunities are more feasible for heavy grades.
· China’s Group I bright stock premium to fob Asia prices extends rise to highest since Q2 2022.
· Widening premium boosts attraction of moving more bright stock cargoes to China.
· Singapore’s base oils exports to China hold steady in Feb 2024, so far avoiding a repeat of last year’s surge in shipments to China during Q1 2023.
· Trend points to still-cautious buying in China, and still-cautious sales from Asia to the country.
· Ongoing pause in Singapore’s imports from China throughout Feb 2024 points to tighter domestic supply or firm domestic prices that cut attraction of exports.
· Singapore’s base oils exports to southeast Asia rise over last four weeks, even with dip in shipments to Indonesia.
· Trend highlights attraction of a region with several major markets with different factors driving supply-demand variables.
· Southeast Asia’s demand for Group I base oils likely to continue to extend to sources beyond the region.
· Sustained slump in Singapore’s base oils imports compounds impact of recent plant maintenance in southeast Asia.
· Fall in Singapore’s imports of Group I base oils continues through Feb 2024.
· Any supplies from Europe likely to take longer to arrive as they are shipped via southern Africa rather than Suez Canal.
· India’s demand for additional supplies could be more muted unless prices are at more competitive levels.
· Indian buyers’ healthy stocks, and prospect of pick-up in arbitrage shipments from US, could incentivize some buyers to pause.
· India’s imports of Group II and Group III base oils rise in Jan 2024 amid firm consumption, expectations of higher prices in the coming months.
· Indian buyers’ procurement plans could get more complicated over the coming months if the scheduled start-up time of new plants in the country is delayed.
· The new plants are set to cut India’s requirements for premium-grade supplies from overseas markets.
· The first plant is expected to start up in Q3 2024.
· Importers face choice of trimming imports in anticipation of rising domestic availability, or maintaining import requirements to cover against any delayed start-up.