![Asia base oils - week of Jan 8: Demand outlook](http://media.assettype.com/baseoilnews%2F2023-07%2F606b4e48-e76c-4456-8cd0-80495c3217c9%2Faerial_view_complex_overpass_modern_chinese_city.jpg?w=480&auto=format%2Ccompress&fit=max)
· Asia’s base oils demand could get support from round of stock-replenishment ahead of seasonal rise in lube demand later in Q1 2024.
· Signs of relatively balanced supply could ease concern about downward price-pressure, adding to buyers’ willingness to start replenishing stocks.
· China’s domestic Group I bright stock premium to fob Asia prices holds firm close to highest in a year, ICIS data shows.
· China’s domestic Group II light-grade price premium to fob Asia prices widens to highest in five months.
· Wider premium makes more feasible the arbitrage to move cargoes from Asia to China.
· Domestic Group II premium widens even after China’s Group II base oils output rises in December to twenty-one-month high.
· More feasible arbitrage and rising domestic output point to pick-up in China’s domestic base oils demand, likely in order to replenish low stocks.
· China’s domestic Group II premium to domestic diesel prices holds firm even amid rising domestic supply and more feasible arbitrage.
· Trend adds to signs of firmer domestic demand.
· Firm domestic base oils premium to diesel could also increase expectations of pressure on base oils prices, incentivizing buyers to limit size of stock-replenishment plans.
· China’s rising base oils output continues to curb any urgency to build larger stocks.
· Japan’s November base oils/lube demand rises for fourth time in five months.
· Japan’s November base oils output exceeds demand by smallest amount since first-half 2021.
· Japan’s firm base oils/lube consumption compounds impact of shrinking domestic production.
· Trend set to impact trade flows, with base oils imports likely to rise to cover more domestic requirements and exports likely to fall amid dwindling surplus supplies.
· Thailand’s November lube demand rises for fourth month.
· Firmer demand points to ongoing recovery in key markets in southeast Asia.
· Firmer lube consumption absorbs more of region’s base oils supplies, curbing prospect of large supply-build at year-end or need to move large volumes to more distant markets.
· Thailand’s November base oils demand outpaces supply for third time in four months.
· Thailand’s balanced-to-tight supply, and prospect of plant maintenance work in January, likely to support firm demand for Group I supplies.
· India’s November base oils supply exceeds demand by largest amount in more than two years.
· Growing surplus curbs Indian buyers’ urgency to procure more supplies, gives them more leverage to hold off until prices move to levels that they deem to be attractive.