· US base oils price premium to feedstock/heating oil prices stays unusually firm.· Strong margins, and weaker diesel premium to crude, adds to incentive for refiners to maximise base oils output.· Sustained strength of base oils prices suggests supply remains tight even with incentive to raise output.· Supply likely to stay tight over the coming month, at a time of year when Atlantic hurricane activity typically peaks.· US National Hurricane Center forecasts no new tropical cyclone formations over the coming week.· Supply gets support from high prices that keep the arbitrage shut to outlets like India.· Supply gets support from high prices that facilitate arbitrage shipments to the Americas.· Supply gets further boost from rebound in base oils imports at end-Q2 2024.· Imports from Asia show signs of staying higher in Q3 2024..· US’ base oils imports rise in June 2024 for first time in more than a year on rebound in shipments from Middle East..· US imports from Asia likely to rebound during Q3 2024 after sliding to multi-year low in June 2024.· Pick-up in imports facilitate buyers’ moves to build stocks during Atlantic hurricane season, add to attraction of maximising Group III base oils consumption.· US imports from Middle East especially face longer shipment time than previously.· They also cut risk of weather-related disruptions that US Gulf coast refiners face during Atlantic hurricane season.· More limited weather-related risks add to attraction of boosting Group III imports during Q3 2024..· Latin America’s base oils supply likely to stay relatively tight and reliant on imports from US.· Dynamic leaves region more exposed to any US supply disruptions over coming weeks.· US base oils exports to Brazil rise to six-month high in June 2024..· Rise in shipments helps to ease Brazil’s tight supply in face of persistently firm domestic demand.· Rise in shipments could help to increase Brazil’s stocks as buffer against any weather-related US supply disruptions over the coming weeks.· Any extension of Brazil’s strong lube demand growth would consume more base oils supply, reducing size of the buffer.· US base oils exports to Brazil show signs of staying higher so far in Q3 2024.· US base oils/lube exports to Mexico rise to three-month high in June 2024..· Lube shipments account for growing share of the total volume, while total shipments far exceed Mexico’s requirements to meet domestic lube demand.· Trend suggests large volume of surplus US base oils supplies continue to move to Mexico.· Trend would exacerbate and prolong US’ tighter supply of certain base oils grades..· Europe’s base oils supply falls the most in first five months of 2024 from year-earlier levels, followed by Asia (excluding China) and Middle East..· Base oils supply rises in Americas and in China in first five months of 2024.· Higher supply in Americas and China outweighs lower supply in other regions.· Higher supply lifts total supply from all the regions to more than 12.1 million tonnes in first five months of 2024, up from less than 12 million tonnes during same period a year earlier.· Excluding China, total supply falls in first five months of 2024..· China’s limited base oils exports curb impact of rising supply beyond that market.· Firm base oils margins in Europe and Asia reflect tighter supply fundamentals in those markets.· Base oils margins stay high in US despite rising supply fundamentals.· Firm US base oils margins reflect more a combination of firm overseas demand, as well as firm domestic demand for additional stocks as buffer against supply disruptions.· Dynamic suggests US base oils margins could face pressure if those demand fundamentals ease..· Europe’s base oils exports to markets outside the region fall to six-month low in June 2024 even as shipments from Netherlands extend rebound..· Trend suggests Europe’s base oils exports consist increasingly of premium-grade base oils as more Group I supply stays in the region..· Europe’s Group I base oils supply shows signs of getting additional boost from increasingly regular flow of shipments to the region from sources like US, Egypt and Saudi Arabia.· Cargo of Group I base oils from US this month set to move to West Africa rather than Europe.· Shipment destination could suggest Europe’s Group I supply is sufficient for now to cover requirements..· Europe’s Group II base oils supply likely to remain readily available as regular shipments from US continue to supplement regional output.· Europe’s Group III base oils supply shows signs of starting Q3 2024 at relatively lower level compared with same time a year earlier.· Drop in premium-grade shipments from Spain in July 2024 could balance out recovery in output in Finland, leaving supply at relatively lower levels in early Q3 2024.· Relatively lower supply would balance out seasonal slowdown in demand during summer-holiday period.· Supply set to get a boost in H2 Aug 2024 as wave of shipments from Middle East and Asia arrive at around the same time.· Supply could get further boost as Europe’s Group III price premium to US prices extends rise, increasing attraction of moving more shipments to Europe..Americas/EMEA base oils demand outlook: Week of 19 Aug.US’ June base oils exports to Brazil rise.US’ June base oils imports rise.Asia base oils supply outlook: Week of 19 Aug.Global base oils arb outlook: Week of 19 Aug.Global base oils cargo flows: Week of 19 Aug
· US base oils price premium to feedstock/heating oil prices stays unusually firm.· Strong margins, and weaker diesel premium to crude, adds to incentive for refiners to maximise base oils output.· Sustained strength of base oils prices suggests supply remains tight even with incentive to raise output.· Supply likely to stay tight over the coming month, at a time of year when Atlantic hurricane activity typically peaks.· US National Hurricane Center forecasts no new tropical cyclone formations over the coming week.· Supply gets support from high prices that keep the arbitrage shut to outlets like India.· Supply gets support from high prices that facilitate arbitrage shipments to the Americas.· Supply gets further boost from rebound in base oils imports at end-Q2 2024.· Imports from Asia show signs of staying higher in Q3 2024..· US’ base oils imports rise in June 2024 for first time in more than a year on rebound in shipments from Middle East..· US imports from Asia likely to rebound during Q3 2024 after sliding to multi-year low in June 2024.· Pick-up in imports facilitate buyers’ moves to build stocks during Atlantic hurricane season, add to attraction of maximising Group III base oils consumption.· US imports from Middle East especially face longer shipment time than previously.· They also cut risk of weather-related disruptions that US Gulf coast refiners face during Atlantic hurricane season.· More limited weather-related risks add to attraction of boosting Group III imports during Q3 2024..· Latin America’s base oils supply likely to stay relatively tight and reliant on imports from US.· Dynamic leaves region more exposed to any US supply disruptions over coming weeks.· US base oils exports to Brazil rise to six-month high in June 2024..· Rise in shipments helps to ease Brazil’s tight supply in face of persistently firm domestic demand.· Rise in shipments could help to increase Brazil’s stocks as buffer against any weather-related US supply disruptions over the coming weeks.· Any extension of Brazil’s strong lube demand growth would consume more base oils supply, reducing size of the buffer.· US base oils exports to Brazil show signs of staying higher so far in Q3 2024.· US base oils/lube exports to Mexico rise to three-month high in June 2024..· Lube shipments account for growing share of the total volume, while total shipments far exceed Mexico’s requirements to meet domestic lube demand.· Trend suggests large volume of surplus US base oils supplies continue to move to Mexico.· Trend would exacerbate and prolong US’ tighter supply of certain base oils grades..· Europe’s base oils supply falls the most in first five months of 2024 from year-earlier levels, followed by Asia (excluding China) and Middle East..· Base oils supply rises in Americas and in China in first five months of 2024.· Higher supply in Americas and China outweighs lower supply in other regions.· Higher supply lifts total supply from all the regions to more than 12.1 million tonnes in first five months of 2024, up from less than 12 million tonnes during same period a year earlier.· Excluding China, total supply falls in first five months of 2024..· China’s limited base oils exports curb impact of rising supply beyond that market.· Firm base oils margins in Europe and Asia reflect tighter supply fundamentals in those markets.· Base oils margins stay high in US despite rising supply fundamentals.· Firm US base oils margins reflect more a combination of firm overseas demand, as well as firm domestic demand for additional stocks as buffer against supply disruptions.· Dynamic suggests US base oils margins could face pressure if those demand fundamentals ease..· Europe’s base oils exports to markets outside the region fall to six-month low in June 2024 even as shipments from Netherlands extend rebound..· Trend suggests Europe’s base oils exports consist increasingly of premium-grade base oils as more Group I supply stays in the region..· Europe’s Group I base oils supply shows signs of getting additional boost from increasingly regular flow of shipments to the region from sources like US, Egypt and Saudi Arabia.· Cargo of Group I base oils from US this month set to move to West Africa rather than Europe.· Shipment destination could suggest Europe’s Group I supply is sufficient for now to cover requirements..· Europe’s Group II base oils supply likely to remain readily available as regular shipments from US continue to supplement regional output.· Europe’s Group III base oils supply shows signs of starting Q3 2024 at relatively lower level compared with same time a year earlier.· Drop in premium-grade shipments from Spain in July 2024 could balance out recovery in output in Finland, leaving supply at relatively lower levels in early Q3 2024.· Relatively lower supply would balance out seasonal slowdown in demand during summer-holiday period.· Supply set to get a boost in H2 Aug 2024 as wave of shipments from Middle East and Asia arrive at around the same time.· Supply could get further boost as Europe’s Group III price premium to US prices extends rise, increasing attraction of moving more shipments to Europe..Americas/EMEA base oils demand outlook: Week of 19 Aug.US’ June base oils exports to Brazil rise.US’ June base oils imports rise.Asia base oils supply outlook: Week of 19 Aug.Global base oils arb outlook: Week of 19 Aug.Global base oils cargo flows: Week of 19 Aug
