· US base oil export prices extend recovery vs feedstock/competing fuel prices.· US base oils domestic spot prices continue to trend lower vs feedstock/competing fuel prices.· Persistent US supply surplus in recent months suggests weak margins have smaller-than-usual impact on refiners’ base oils production plans.· Steady-to-firm base oils output despite lower margins coincides with weakening diesel premium to crude oil..· US Group III base oils prices extend sharp fall, dipping to discount to Europe prices for first time since Sept 2023.· Price-fall cuts attraction of moving more Group III shipments to the US.· Prices fall even with sustained slowdown in US base oils imports over past ten months to Feb 2024..· Fall in prices suggests US Group III base oils supply continued to exceed demand even with slowdown in shipments..· Rising US base oils export prices make arbitrage shipments less attractive, pointing to more manageable supply surplus for now.· Firmer prices and smaller surplus follow slide in export prices in Feb 2024 to help clear large surplus.· Surplus builds earlier this year after US base oils exports stay lower than usual in Feb 2024, when domestic demand typically falls sharply..· US export price discount to prices in markets like India and Europe stays relatively wide even after narrowing sharply.· Still-wide export-price discount points to moves to maintain steady exports to avoid another supply-build. · US base oils exports to Mexico recover in Feb 2024, adding to signs that drop in shipments to the country has bottomed out.· US’ February base oils exports to Singapore rise to highest since 2017, extending recent pick-up in shipments to the island-state..· Any extension of that trend would help to support higher US exports and add to supplies in Asia-Pacific region, where demand faces slowdown in Q2 2024..· Shortfall of Latin Americas’ January base oils supply vs lube demand narrows to smallest volume in almost four years..· Smaller shortfall mostly reflects rebound in region’s base oils output.· Smaller shortfall cuts Latin America’s requirements for overseas shipments.· US exports to Latin America and Mexico duly fall in Jan 2024 to lowest in thirteen months.· Surplus of US exports over Latin America’s net demand stays unusually high in Jan 2024 even with drop in shipments..· Trend raises prospect of curbing region’s demand for overseas supplies over following months until surplus supply has fallen..· Europe’s Group I bright stock supply could tighten as competitive export prices boost attraction of moving more supplies to overseas markets.· Europe’s Group II base oils supply shows signs of staying tighter than usual throughout Q1 2024 amid plant maintenance work and lower supplies from US.· Supplies from US could stay lower following restart of Group II unit in Netherlands and narrower US export price discount to Europe prices.· Discount of US Group II export prices to Europe prices stays relatively wide even after narrowing from recent highs.· Europe’s Group III base oils supply could stay tighter in short-term amid regional plant maintenance work and signs of slowdown in shipments from UAE so far this year.· Recent slump in US Group III prices to discount to Europe prices could revive attraction of moving more shipments to Europe.· Indonesia’s Group III base oils exports to Europe pause in February for the second time in three months..· Trend raises prospect of curbing Europe’s Group III base oils supply from Asia through Q1 2024.· Cargo of Group III base oils from Indonesia reaches northwest Europe earlier this month after loading in March 2024.· Shipment time of less than 40 days for the cargo was shorter than the time for a January-loading cargo.· Shorter voyage time points to diminishing time impact of cargoes moving from Asia to Europe via southern Africa rather than Suez Canal. .· Europe’s base oils supply, or domestic output and imports combined, lags demand, or base oil imports and lube demand combined, in Jan 2024 for second time in three months..· Europe’s base oils supply usually exceeds demand in the month of January.· Supply shortfall at start of the year raises prospect of limiting size of regional supply-build in Q1 2024..Americas/EMEA base oils demand outlook: Week of 15 April.Asia base oils supply outlook: Week of 15 April.Global base oils margins outlook: Week of 15 April.Global base oils arb outlook: Week of 15 April
