· US base oils prices mostly hold firm in narrow range versus feedstock/competing fuel prices.· Margins edge higher mostly because of lower crude oil prices rather than rise in base oils prices.· Margins in Europe and Asia rise more strongly because of rise in base oils prices.· US base oils margins edge higher even as plant-maintenance work and seasonal round of stock-replenishment typically cut volume of surplus supply.· US Group II heavy-grade export price discount to ex-tank Singapore price stays unusually wide..· Wide discount facilitates arbitrage shipments, raising prospect of squeezing supply even more.· Wide discount, at a time when domestic supply-demand fundamentals typically strengthen, could instead reflect larger-than-expected availability of surplus supply.· Size of surplus supply showed signs of being more manageable early this year following sustained wave of exports since Q3 2024..· US base oils and lube exports to Mexico and Africa extend strong rise in Jan 2025, contrasting with slide in shipments to other markets..· Total shipments combined sustain US exports at elevated levels in Jan 2025, slowing pace of any supply-build.· Rise in shipments to Mexico/Africa helps to clear swathe of surplus supplies.· Fall in exports to other markets coincides with steady US Group II export prices from mid-Nov 2024 to end-Feb 2025.· Steady prices suggest that shipment of large volumes to Mexico/Africa have smaller impact on market prices than shipments to other markets like Europe.· Rise in shipments to Mexico/Africa also trims size of any supply-build in other markets like Europe.· Dynamic increases importance of markets like Mexico and Africa as outlets to clear surplus supplies and that curb price impact on the wider market..· US Group III base oils prices hold firm or rise further relative to Group II base oils and relative to other markets like Europe..· Firmer Group III prices point to easing pressure from surplus supply even with pick-up in US base oils imports in Jan 2025 and signs of further rise in shipments in March 2025..· Firmer Group III prices and easing pressure from surplus supply add to signs of slowdown in Group III output from domestic sources.· US Group III imports from Middle East rebound in Jan 2025, boosting their share of total imports..· Rise in shipments and share of imports extends trend from 2024, keeping pressure on supplies from Asia-Pacific to boost competitiveness or to target other markets..· Europe’s base oils supply likely to stay more mixed, with balanced-to-tight availability of Group I base oils and more plentiful availability of premium grades.· More balanced Group I supply raises prospect of availability tightening in response to seasonal rise in demand and any plant maintenance work.· More balanced Group I supply early this year already curbed availability for export, supporting firmer prices and keeping arbitrage shut.· More balanced supply curbs availability and need to move surplus volumes to outlets like Turkey.· Turkey’s Group I base oils imports from Europe fall to multi-year low in Jan 2025, reflecting that dynamic..· Europe’s Group II base oils supply gets boost from pick-up in US exports to the region in Jan 2025..· Rise in shipments coincides with prospect of steady-to-firm regional Group II base oils output in Q1 2025, keeping supplies at healthy levels.· Europe’s Group II base oils prices hold firm vs VGO and vs Group I prices even with signs of healthy supply..· Firm Group II price levels could reflect stronger-than-usual demand.· Firm prices could reflect change in supply, such as possibility of rise in Group II base oils exports from Europe to other markets like Asia, or expectations of drop in shipments from US in coming months because of plant maintenance work.· Any signs of steady, rather than stronger demand, or steady, rather than lower US exports to Europe would instead point to more balanced supply-demand fundamentals. .Americas/EMEA base oils demand outlook: Week of 17 March.Asia base oils supply outlook: Week of 17 March.Global base oils margins outlook: Week of 17 March.Global base oils arb outlook: Week of 17 March.US January exports to S America stay low.US’ Jan base oils exports hold steady
