· Asia’s base oils demand likely to get support from seasonal pick-up in consumption over coming weeks and from still-limited availability of Group I base oils.· China’s base oils demand shows signs of focusing more on heavy grades.· China’s Group II light-grade premium to Shandong diesel prices edges down, contrasts with surging premium throughout Q1 2023.· Trend points to more cautious domestic demand for light grades.· China’s domestic Group II light/heavy-grade premium to fob Asia prices steadies, down from recent highs in Jan 2024 and well down from highs in Q1 2023.· China’s domestic Group III 4cst premium to fob Asia prices holds at lowest since June 2023.· Lower premiums cut attraction of moving more arbitrage shipments to China.· China’s domestic Group I bright stock premium to fob Asia prices rises to highest since Q1 2022 – making arbitrage even more attractive.· Asia’s Group I heavy-grade base oils premium to Group II prices sustains incentive for blenders to consume more Group II supplies instead of Group I.· Any such moves could extend tight availability of Group I heavy grades to Group II heavy grades..· Asia’s lube demand faces strong seasonal rise in consumption in month of March.· Demand in April set to fall after buyers bring forward their consumption, trimming Q2 2024 lube demand vs Q1 2024..· Regional base oils producers face challenge of boosting supply to meet seasonal rise in demand, before adjusting supply to avoid subsequent supply-build..· Singapore’s base oils exports to China hold firm during Feb 2024, so far avoiding repeat of surge in shipments in Q1 2023..· Shipments point to more cautious stock-building in China even as market enters peak-demand period.· More cautious stock-building would require more frequent stock-replenishment if demand exceeds expectations.· Ongoing pause in Singapore imports from China adds to signs of firmer domestic demand.· Singapore’s base oils exports to southeast Asia show signs of slipping in Feb 2024 mostly because of slowdown in shipments to Indonesia..· Japan’s domestic base oils consumption in Jan 2024 accounts for more than 80pc of country’s total demand, or domestic consumption and exports combined..· Before Oct 2023, the last time that domestic consumption accounted for at least 80pc of total demand was in 2012.· Trend highlights Japan’s more limited availability of supplies for export..· India’s January base oils supply exceeds demand for a fourth month..· Trend leaves domestic buyers well positioned to tap any rise in regional base oils prices over the coming months.· Buyers’ healthy stocks, and persistent signs of additional availability of supplies from US, could create dilemma for buyers.· Lack of urgency to add to stocks could incentivize buyers to target lower prices.· Lower prices could complicate any strategy of building stocks to benefit from expected rise in prices..· India’s January base oils supply, excluding very-light grade base oils imports, remains lower than demand..· Size of supply deficit shrinks to smallest in seventeen months.· Even excluding very-light grade imports, trend suggests India’s blenders’ supplies remain higher than usual..· CFR India N70 premium to regional gasoil prices extends recovery even amid signs of healthy availability in early 2024.· Rising premium coincides with signs of slowdown in shipments from Saudi Arabia to India in recent weeks.· Rising premium coincides with still-firm domestic retail diesel premium to imported N70 prices in Feb 2024..· Firmer diesel premium to N70 often coincides with stronger demand for light-grade base oils.· CFR India Group I bright stock premium to fob Europe prices widens further to highest in more than four years.· Wide premium boosts incentive to move heavy grades from Europe/Russia to India..· Pakistan’s sustained recovery in lube demand during 2H 2023 contrasts with slump in domestic production..· Diverging trends boost requirements for overseas base oils supplies.· Trend boosts Pakistan’s base oils imports as share of country’s total share to more than 66pc of the total in 2023, up from a 64pc share in 2022..· Prospect of extension of the trend in 2024 leaves suppliers from South Korea well positioned to benefit the most.· Pakistan’s imports from South Korea accounted for more than 60pc of country’s total imports in 2023, up from a 48pc share in 2022..Global base oils margins outlook: Week of March 4.Global base oils arb outlook: Week of March 4.Global base oils demand outlook: Week of March 4.Global base oils cargo flows: Week of March 4
· Asia’s base oils demand likely to get support from seasonal pick-up in consumption over coming weeks and from still-limited availability of Group I base oils.· China’s base oils demand shows signs of focusing more on heavy grades.· China’s Group II light-grade premium to Shandong diesel prices edges down, contrasts with surging premium throughout Q1 2023.· Trend points to more cautious domestic demand for light grades.· China’s domestic Group II light/heavy-grade premium to fob Asia prices steadies, down from recent highs in Jan 2024 and well down from highs in Q1 2023.· China’s domestic Group III 4cst premium to fob Asia prices holds at lowest since June 2023.· Lower premiums cut attraction of moving more arbitrage shipments to China.· China’s domestic Group I bright stock premium to fob Asia prices rises to highest since Q1 2022 – making arbitrage even more attractive.· Asia’s Group I heavy-grade base oils premium to Group II prices sustains incentive for blenders to consume more Group II supplies instead of Group I.· Any such moves could extend tight availability of Group I heavy grades to Group II heavy grades..· Asia’s lube demand faces strong seasonal rise in consumption in month of March.· Demand in April set to fall after buyers bring forward their consumption, trimming Q2 2024 lube demand vs Q1 2024..· Regional base oils producers face challenge of boosting supply to meet seasonal rise in demand, before adjusting supply to avoid subsequent supply-build..· Singapore’s base oils exports to China hold firm during Feb 2024, so far avoiding repeat of surge in shipments in Q1 2023..· Shipments point to more cautious stock-building in China even as market enters peak-demand period.· More cautious stock-building would require more frequent stock-replenishment if demand exceeds expectations.· Ongoing pause in Singapore imports from China adds to signs of firmer domestic demand.· Singapore’s base oils exports to southeast Asia show signs of slipping in Feb 2024 mostly because of slowdown in shipments to Indonesia..· Japan’s domestic base oils consumption in Jan 2024 accounts for more than 80pc of country’s total demand, or domestic consumption and exports combined..· Before Oct 2023, the last time that domestic consumption accounted for at least 80pc of total demand was in 2012.· Trend highlights Japan’s more limited availability of supplies for export..· India’s January base oils supply exceeds demand for a fourth month..· Trend leaves domestic buyers well positioned to tap any rise in regional base oils prices over the coming months.· Buyers’ healthy stocks, and persistent signs of additional availability of supplies from US, could create dilemma for buyers.· Lack of urgency to add to stocks could incentivize buyers to target lower prices.· Lower prices could complicate any strategy of building stocks to benefit from expected rise in prices..· India’s January base oils supply, excluding very-light grade base oils imports, remains lower than demand..· Size of supply deficit shrinks to smallest in seventeen months.· Even excluding very-light grade imports, trend suggests India’s blenders’ supplies remain higher than usual..· CFR India N70 premium to regional gasoil prices extends recovery even amid signs of healthy availability in early 2024.· Rising premium coincides with signs of slowdown in shipments from Saudi Arabia to India in recent weeks.· Rising premium coincides with still-firm domestic retail diesel premium to imported N70 prices in Feb 2024..· Firmer diesel premium to N70 often coincides with stronger demand for light-grade base oils.· CFR India Group I bright stock premium to fob Europe prices widens further to highest in more than four years.· Wide premium boosts incentive to move heavy grades from Europe/Russia to India..· Pakistan’s sustained recovery in lube demand during 2H 2023 contrasts with slump in domestic production..· Diverging trends boost requirements for overseas base oils supplies.· Trend boosts Pakistan’s base oils imports as share of country’s total share to more than 66pc of the total in 2023, up from a 64pc share in 2022..· Prospect of extension of the trend in 2024 leaves suppliers from South Korea well positioned to benefit the most.· Pakistan’s imports from South Korea accounted for more than 60pc of country’s total imports in 2023, up from a 48pc share in 2022..Global base oils margins outlook: Week of March 4.Global base oils arb outlook: Week of March 4.Global base oils demand outlook: Week of March 4.Global base oils cargo flows: Week of March 4