· Rebounding US base oils prices vs feedstock prices incentivize refiners to maintain or raise output.· Firmer US outright prices curb attraction of tapping arbitrage opportunities to overseas markets.· Firm base oils margins and less attractive arbitrage point to tighter supply, and simultaneously raise prospect of more rapid recovery in supply.· US base oils prices remain low vs prices in Asia and Europe, curbing prospect of arbitrage shipments from those markets moving to the Americas..· US’ March base oils imports fall for eleventh month from year earlier amid sustained slowdown in demand for overseas supplies of Group III base oils..· US Group III base oils imports from Asia show signs of staying lower in May 2024.· Flow of Group III supplies from Middle East to US show signs of slowing in Q2 2024 as more cargoes move to Europe and Asia.· Slowdown in shipments reflects combination of US’ weaker domestic demand, rising domestic Group III supply, and prices that make the arbitrage to the US increasingly unattractive.· Trend puts pressure on overseas suppliers to redirect more shipments to other regions.· Any such move could leave those other regions also facing pressure from rising surplus Group III base oils supply.· Trend leaves overseas Group III producers facing choice of cutting production or of accepting lower prices that allow supplies to target outlets like light-grade Group II base oils market..· Brazil’s base oils supply surplus rises to three-year high in Q1 2024 on sustained rise in domestic output and imports..· Brazil’s March base oils imports stay unusually high despite high domestic output.· Brazil duly carries large supply surplus into Q2 2024, raising prospect of slowdown in demand for overseas supplies.· Any extension of drop in Brazil’s lube demand into Q2 2024 could compound a slowdown in demand for overseas supplies.· Any such slowdown would put pressure on US suppliers to move more shipments to other markets instead..· Europe’s Group I base oils supply faces prospect of sustained tightness following closure of base oils plant in Italy.· Italy’s base oils stocks already slump to multi-year low by end-March 2024..· Italy’s stocks slump ahead of seasonal pick-up in regional demand and scheduled plant maintenance work in Europe in Q2 2024.· Recent surge in Europe’s Group I export prices reflect subsequent market tightness and focus on covering regional rather than overseas base oils requirements.· Tighter Group I supply and higher prices increase incentive for refiners in markets like Egypt and Saudi Arabia to target Europe with more supplies..· Europe’s Group II base oils supply set to recover in Q2 2024 amid pick-up in regional output and signs of rise in shipments from US.· Supply recovers after Europe’s February Group II base oils supply falls to 21-month low on regional plant maintenance work, drop in imports from US..· Shipments from US to Europe show signs of rising in March 2024 and April 2024 even after rebound in US Group II export prices erodes attraction of moving more arbitrage cargoes to the region.· Europe’s Group III base oils supply gets boost from delivery of more shipments from other regions in May 2024.· Wide premium of Europe Group III prices over US prices sustains overseas sellers’ incentive to move more shipments to Europe..· South Africa’s March base oils imports rise for fifth time in six months from year-earlier levels.· Steady rise in imports reflects country’s reliance on overseas supplies for all its base oils requirements.· Share of South Africa’s imports from Europe holds at at least 60% of the total in first three months of 2024..· Share rises from 55% of total imports in 2023.· Share of imports rises even with Group I plant closure and Group II plant maintenance in Europe in early 2024.· Trend could point to moves to maintain or expand market share in outlets with growing Group II base oils consumption..· Tanzania’s base oils imports fall in Q1 2024 to lowest in at least eight years for that three-month period..· Imports fall amid simultaneous dip in supplies from Europe and Middle East.· Lower shipments partly reflect logistical complications of shipments from Saudi Arabia to East Africa, as well as tighter Group I supply in Europe..Americas/EMEA base oils demand outlook: Week of 13 May.Asia base oils supply outlook: Week of 13 May.Global base oils arb outlook: Week of 13 May.Global base oils cargo flows: Week of 13 May.Global base oils margins outlook: Week of 13 May
· Rebounding US base oils prices vs feedstock prices incentivize refiners to maintain or raise output.· Firmer US outright prices curb attraction of tapping arbitrage opportunities to overseas markets.· Firm base oils margins and less attractive arbitrage point to tighter supply, and simultaneously raise prospect of more rapid recovery in supply.· US base oils prices remain low vs prices in Asia and Europe, curbing prospect of arbitrage shipments from those markets moving to the Americas..· US’ March base oils imports fall for eleventh month from year earlier amid sustained slowdown in demand for overseas supplies of Group III base oils..· US Group III base oils imports from Asia show signs of staying lower in May 2024.· Flow of Group III supplies from Middle East to US show signs of slowing in Q2 2024 as more cargoes move to Europe and Asia.· Slowdown in shipments reflects combination of US’ weaker domestic demand, rising domestic Group III supply, and prices that make the arbitrage to the US increasingly unattractive.· Trend puts pressure on overseas suppliers to redirect more shipments to other regions.· Any such move could leave those other regions also facing pressure from rising surplus Group III base oils supply.· Trend leaves overseas Group III producers facing choice of cutting production or of accepting lower prices that allow supplies to target outlets like light-grade Group II base oils market..· Brazil’s base oils supply surplus rises to three-year high in Q1 2024 on sustained rise in domestic output and imports..· Brazil’s March base oils imports stay unusually high despite high domestic output.· Brazil duly carries large supply surplus into Q2 2024, raising prospect of slowdown in demand for overseas supplies.· Any extension of drop in Brazil’s lube demand into Q2 2024 could compound a slowdown in demand for overseas supplies.· Any such slowdown would put pressure on US suppliers to move more shipments to other markets instead..· Europe’s Group I base oils supply faces prospect of sustained tightness following closure of base oils plant in Italy.· Italy’s base oils stocks already slump to multi-year low by end-March 2024..· Italy’s stocks slump ahead of seasonal pick-up in regional demand and scheduled plant maintenance work in Europe in Q2 2024.· Recent surge in Europe’s Group I export prices reflect subsequent market tightness and focus on covering regional rather than overseas base oils requirements.· Tighter Group I supply and higher prices increase incentive for refiners in markets like Egypt and Saudi Arabia to target Europe with more supplies..· Europe’s Group II base oils supply set to recover in Q2 2024 amid pick-up in regional output and signs of rise in shipments from US.· Supply recovers after Europe’s February Group II base oils supply falls to 21-month low on regional plant maintenance work, drop in imports from US..· Shipments from US to Europe show signs of rising in March 2024 and April 2024 even after rebound in US Group II export prices erodes attraction of moving more arbitrage cargoes to the region.· Europe’s Group III base oils supply gets boost from delivery of more shipments from other regions in May 2024.· Wide premium of Europe Group III prices over US prices sustains overseas sellers’ incentive to move more shipments to Europe..· South Africa’s March base oils imports rise for fifth time in six months from year-earlier levels.· Steady rise in imports reflects country’s reliance on overseas supplies for all its base oils requirements.· Share of South Africa’s imports from Europe holds at at least 60% of the total in first three months of 2024..· Share rises from 55% of total imports in 2023.· Share of imports rises even with Group I plant closure and Group II plant maintenance in Europe in early 2024.· Trend could point to moves to maintain or expand market share in outlets with growing Group II base oils consumption..· Tanzania’s base oils imports fall in Q1 2024 to lowest in at least eight years for that three-month period..· Imports fall amid simultaneous dip in supplies from Europe and Middle East.· Lower shipments partly reflect logistical complications of shipments from Saudi Arabia to East Africa, as well as tighter Group I supply in Europe..Americas/EMEA base oils demand outlook: Week of 13 May.Asia base oils supply outlook: Week of 13 May.Global base oils arb outlook: Week of 13 May.Global base oils cargo flows: Week of 13 May.Global base oils margins outlook: Week of 13 May
