· Size of US Group II base oils supply-surplus carried into start of 2024 could be more manageable following wave of exports in Q4 2023.· US export prices stay competitive, sustaining arbitrage opportunities to other regions.· Competitive export prices curb flow of Group II shipments to Americas from other regions.· US faces surge in Group III base oils supplies in late-2023 and start of this year..· US’ November Group III base oils imports rise for first time in seven months on surge in supplies from Mideast Gulf..· US’ rising imports from Mideast Gulf in Jan-Nov 2023 contrast with fall in total imports.· Trend leaves supplies from Mideast Gulf accounting for rising share of US Group III supply, and supplies from Asia accounting for shrinking share.· Trend suggests that US blenders are more comfortable using supplies that do not include all the OEM approvals that supplies have from some Asia refiners.· Trend suggests that price spread between supplies with OEM approvals and supplies with fewer OEM approvals is wide enough to incentivize blenders to use more lower-priced supplies.· Prospect of muted Chinese demand and possibility of weaker demand from India in 2024 puts pressure on Asia refiners to move more Group III supplies to US and Europe.· Group III supplies from South Korea to US already show signs of rebounding in last few weeks of 2023..· US’ November base oils exports rise to third-highest level on record..· Rise in shipments clears more surplus volumes from US market, curbing speed and size of supply-build at year-end.· A smaller supply surplus at start of 2024 would contrast with start of 2023, curbing pressure on prices.· Surge in exports in July-Nov 2023 coincides with increasingly competitive US export prices, contrasts with closed arbitrage to key outlets in 2H 2022.· Surge in exports highlights benefit/importance of competitive US prices especially at a time when domestic demand is weak..· Argentina’s November base oils supply rises to more typical levels following recovery in domestic output..· Argentina may need to rely even more on domestic output over coming months as currency depreciation increases cost of imports.· India takes delivery of unusual shipment of naphthenic base oils from Brazil in Dec 2023 despite Brazil’s lower base oils output in 2H 2023..· Europe’s Group I base oils supply surplus is sufficiently large for sale of export cargo this month at steeply discounted prices.· Surplus supply likely reflects firmer Group I base oils output in Italy at end-2023.· Size of supply-surplus likely to be more limited than at end-2022 after large shipment moved to Singapore at end-2023.· Europe’s Group II supply could get boost from signs of pick-up in shipments from US at end-2023.· Any rise in Europe’s Group II supply would coincide with regional Group II prices at highest premium to Group I prices since start of Q2 2023.· Europe’s Group II prices maintain steep premium to US prices, sustaining attraction of moving more supplies to Europe.· Europe’s Group III base oils supply gets boost from rebound in premium-grade shipments from Spain at end-2023..· Premium-grade shipments from Spain’s port of Cartagena rebound to five-month high in Dec 2023.· Recovery follows sharp slowdown in shipments from Spain in Oct and Nov 2023.· Supplies from Spain could become more important amid possibility of delays with shipments of premium-grade base oils from Mideast Gulf to Europe.· Supplies from Saudi Arabia and Spain to India or Asia-Pacific markets could face similar delays..· Europe’s October Group I base oils supply rises to six-month high, stays lower than in recent years..· Relatively steady Group I supply in recent months to Oct 2023 coincides with limited surplus volumes for export.· Trend suggests Europe’s demand for Group I base oils remains sufficient to absorb existing supplies during that period.· Trend suggests that any rise in Europe’s Group I supply from those levels could trigger pick-up in availability of spot shipments for export.· Trend suggests that any fall in Europe’s Group I supply from those levels could leave the market with insufficient volumes to cover requirements..· Europe’s October Group II supply falls to thirteen-month low..· Drop in supplies curbs prospect of large supply-build during Q4 2023, coincides with firmer Group II prices during that period.· Fall in Group II supplies likely to be temporary amid signs of rebound in supplies from US before year-end..Americas/EMEA base oils - week of Jan 15: Demand outlook.Asia base oils - week of Jan 15: Supply outlook.Global base oils - week of Jan 15: Price outlook - margins.Global base oils - week of Jan 15: Price outlook - arbitrage
· Size of US Group II base oils supply-surplus carried into start of 2024 could be more manageable following wave of exports in Q4 2023.· US export prices stay competitive, sustaining arbitrage opportunities to other regions.· Competitive export prices curb flow of Group II shipments to Americas from other regions.· US faces surge in Group III base oils supplies in late-2023 and start of this year..· US’ November Group III base oils imports rise for first time in seven months on surge in supplies from Mideast Gulf..· US’ rising imports from Mideast Gulf in Jan-Nov 2023 contrast with fall in total imports.· Trend leaves supplies from Mideast Gulf accounting for rising share of US Group III supply, and supplies from Asia accounting for shrinking share.· Trend suggests that US blenders are more comfortable using supplies that do not include all the OEM approvals that supplies have from some Asia refiners.· Trend suggests that price spread between supplies with OEM approvals and supplies with fewer OEM approvals is wide enough to incentivize blenders to use more lower-priced supplies.· Prospect of muted Chinese demand and possibility of weaker demand from India in 2024 puts pressure on Asia refiners to move more Group III supplies to US and Europe.· Group III supplies from South Korea to US already show signs of rebounding in last few weeks of 2023..· US’ November base oils exports rise to third-highest level on record..· Rise in shipments clears more surplus volumes from US market, curbing speed and size of supply-build at year-end.· A smaller supply surplus at start of 2024 would contrast with start of 2023, curbing pressure on prices.· Surge in exports in July-Nov 2023 coincides with increasingly competitive US export prices, contrasts with closed arbitrage to key outlets in 2H 2022.· Surge in exports highlights benefit/importance of competitive US prices especially at a time when domestic demand is weak..· Argentina’s November base oils supply rises to more typical levels following recovery in domestic output..· Argentina may need to rely even more on domestic output over coming months as currency depreciation increases cost of imports.· India takes delivery of unusual shipment of naphthenic base oils from Brazil in Dec 2023 despite Brazil’s lower base oils output in 2H 2023..· Europe’s Group I base oils supply surplus is sufficiently large for sale of export cargo this month at steeply discounted prices.· Surplus supply likely reflects firmer Group I base oils output in Italy at end-2023.· Size of supply-surplus likely to be more limited than at end-2022 after large shipment moved to Singapore at end-2023.· Europe’s Group II supply could get boost from signs of pick-up in shipments from US at end-2023.· Any rise in Europe’s Group II supply would coincide with regional Group II prices at highest premium to Group I prices since start of Q2 2023.· Europe’s Group II prices maintain steep premium to US prices, sustaining attraction of moving more supplies to Europe.· Europe’s Group III base oils supply gets boost from rebound in premium-grade shipments from Spain at end-2023..· Premium-grade shipments from Spain’s port of Cartagena rebound to five-month high in Dec 2023.· Recovery follows sharp slowdown in shipments from Spain in Oct and Nov 2023.· Supplies from Spain could become more important amid possibility of delays with shipments of premium-grade base oils from Mideast Gulf to Europe.· Supplies from Saudi Arabia and Spain to India or Asia-Pacific markets could face similar delays..· Europe’s October Group I base oils supply rises to six-month high, stays lower than in recent years..· Relatively steady Group I supply in recent months to Oct 2023 coincides with limited surplus volumes for export.· Trend suggests Europe’s demand for Group I base oils remains sufficient to absorb existing supplies during that period.· Trend suggests that any rise in Europe’s Group I supply from those levels could trigger pick-up in availability of spot shipments for export.· Trend suggests that any fall in Europe’s Group I supply from those levels could leave the market with insufficient volumes to cover requirements..· Europe’s October Group II supply falls to thirteen-month low..· Drop in supplies curbs prospect of large supply-build during Q4 2023, coincides with firmer Group II prices during that period.· Fall in Group II supplies likely to be temporary amid signs of rebound in supplies from US before year-end..Americas/EMEA base oils - week of Jan 15: Demand outlook.Asia base oils - week of Jan 15: Supply outlook.Global base oils - week of Jan 15: Price outlook - margins.Global base oils - week of Jan 15: Price outlook - arbitrage