In today’s briefing:
- Tariff Transition Smoothing
- Global base oils arb outlook: Week of 31 March
- FSS to Allow Foreigners to Invest in Korean Stocks Through Overseas Local Securities Firms
- Global base oils margins outlook: Week of 31 March
- Americas/EMEA base oils demand outlook: Week of 31 March
- Americas/EMEA base oils supply outlook: Week of 31 March
- Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 3 April 2025
Tariff Transition Smoothing
- President Trump’s tariffs embed structural cost pressures, compounding supply chain changes and creating a stagflationary shock central banks cannot offset.
- Potential retaliation risks raising inflation expectations, constraining the extent to which monetary policy can smooth transitional pains through temporary easing.
- We still believe any dovish policy imperative is likely to be short, shallow, and reversed, with central banks forced to remain flexible and focused on shorter horizons again.
Global base oils arb outlook: Week of 31 March
- US base oils export price-discount to US domestic prices stays narrower in Q1 2025 vs year-earlier.
- Narrower export price-discount points to more manageable supply surplus at end-2024 and early this year, when domestic demand faced seasonal slowdown.
- More manageable supply surplus follows firm export volumes through H2 2024 and early this year.
FSS to Allow Foreigners to Invest in Korean Stocks Through Overseas Local Securities Firms
- FSS announced that it will relax the requirements for opening a foreign integrated account to allow foreigners to more easily invest in Korean stocks through overseas local securities firms.
- On 11 March, Interactive Brokers announced that it invested 15 billion won in Next Securities. So far, IBKR has not formally announced that it will allow trading of Korean stocks.
- We expect IBKR to allow trading of Korean stocks in 2025, mainly due to its investment in Next Securities and FSS’s announcement today on relaxation of opening foreign omnibus accounts.
Global base oils margins outlook: Week of 31 March
- Global base oils prices slip relative to firmer feedstock/competing fuel prices.
- Base oils margins in most markets remain at levels that point to balanced-to-tight supply-demand fundamentals, incentivizing refiners to maintain higher output.
- FOB Asia base oils prices fall vs gasoil prices.
Americas/EMEA base oils demand outlook: Week of 31 March
- US base oils demand typically rises around this time of year to meet seasonal pick-up in lube consumption.
- US spot base oils prices mostly hold steady, even with round of plant maintenance work and higher crude oil prices that keep margins under pressure.
- Steady prices, despite rangebound margins and lower supply, suggest demand is lower than usual and lower than expected for the time of year.
Americas/EMEA base oils supply outlook: Week of 31 March
- US base oils prices mostly stay in narrow range vs VGO prices, contrast with surging premium to VGO this time a year ago.
- Margins hold in narrow range this year even as extensive round of plant maintenance tightens supply.
- Supply could face additional disruption from markets like Canada, depending on impact and reaction to imposition of any US tariffs.
Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 3 April 2025
Global manufacturing slowdown: PMIs for major economies, including the U.S., U.K., and much of Asia, indicate contraction, with India standing out as a bright spot.
Economic uncertainty: Rising U.S. inflation challenges interest rate cut expectations, while South Korea’s trade data suggests stagnant global trade.
Regional developments: Hong Kong retail sales saw a year-on-year decline but slight month-on-month improvement; upcoming reports will provide deeper insights from key Asian economies.
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