· US Group II light-grade export-price premium to vacuum gasoil holds close to lows in Q1 2025..· Lower base oils margins and drop in outright export prices suggest recent tightness of light-grade supplies is easing.· Drop in export prices facilitates removal of any such surplus volumes, keeping fundamentals balanced for longer in domestic market..· Rise in US base oils exports to markets like Mexico and India in June 2025 helps to trim volume of surplus supplies in US domestic market.· Rise in shipments to those markets points to moves to prioritize rapid removal of surplus volumes, even with US stocks at low levels.· Rise in shipments helps to limit size of fall in US total base oils/lube exports in June 2025..· Excluding shipments to Mexico and India, total US exports fall by almost 40% in June 2025 from year-earlier levels..· US Group III base oils supply likely to improve, after more volatile flows in recent months.· US Group III base oils imports rebound in June 2025 after slumping in May 2025..· Rise in imports, combined with drop in US exports, adds to domestic supply.· US base oils imports show signs of holding relatively firm last month, before slowing again in August 2025.· More volatile flows follow round of plant-maintenance in Middle East in Q2 2025.· Completion of plant-maintenance work means any further volatility in flows beyond Q3 2025 likely to reflect state of demand rather than tighter supplies..· Latin America’s base oils supply could tighten following slump in US exports to the region in June 2025.· US exports to Brazil fall to five-month low in June 2025, while shipments to Argentina also halt..· Latin America’s supply-balance was already tight even with weaker demand in recent months.· Dynamic puts onus on regional base oils output holding at elevated levels to cover larger share of demand..· Europe’s base oils supply likely to be increasingly readily available amid slack demand and scant arbitrage opportunities to clear surplus Group I volumes.· Europe Group I base oils export prices maintain steep premium to prices in markets like Middle East..· Persistent price-premium, and more complicated arbitrage opportunities, suggest that any pick-up in surplus supplies in Europe is likely to materialize faster.· Persistent price-premium suggests that any rise in surplus supplies in Europe remains manageable for now.· More manageable supplies could also reflect steady removal of surplus volumes from regional market despite price-premium.· Group I base oils supply could hold relatively steady as recovery in regional output curbs need for additional imports from markets like US and Egypt.· Even with steady Group I base oils supply, its share of Europe's total supply is likely to continue to shrink. · Group I base oils' share of Europe’s base oils market falls to around 37% of total supply in first five months of 2025, down from 40% share in 2024..· Group II base oils’ share rises to 33% of total supply in Jan-May 2025, from 32% in 2024.· Group III base oils’ share rises to 30% of total supply in Jan-May 2025, from 28% in 2024.· Dynamic highlights increasingly plentiful availability of premium-grade base oils.· Dynamic highlights Group I base oils' still-large share of Europe market even as availability tightens.· Large share and shrinking production capacity magnifies impact of any change in Group I supply.· Dynamic could boost attraction for blenders to use other grades for which supply is more stable..· Group III base oils supply likely to continue to recover in coming weeks amid pick-up in shipments from Spain and Middle East.· Relatively muted rise in Group III prices relative to other grades in recent months points to sufficient supply to cover requirements even during round of plant-maintenance work.· Europe’s Group III 4cSt (high) price-premium over 4cSt (low) price falls to lowest in more than two months..· Narrower price-premium points to still-tighter supply-demand fundamentals for supplies without full set of OEM approvals than for supplies with full set of approvals.· Any extension of narrower price-premium, even as supply from Middle East improves, could instead point to premium finding equilibrium at lower level than in early-2025.· Even at lower level, Group III 4cSt (high) price-premium remains unusually high..Americas/EMEA base oils demand outlook: Week of 11 August.US June base oils/lube exports fall.US’ June base oils imports rise.US June base oil exports to S America fall.Asia base oils supply outlook: Week of 11 August.Global base oils arb outlook: Week of 11 August.Base Oil News stories and analysis also available on ICIS platform
