· US base oils premium to feedstock/competing fuel prices holds firm, contrasting with ongoing weakness of diesel premium to crude.· Trend sustains attraction for US refiners to maintain or raise base oils output.· US Group II light-grade prices stay firmer than usual relative to other grades and relative to prices in other regions.· Price-strength points to still-tighter availability of Group II light grades relative to other grades.· Firm margins and more limited arbitrage opportunities raise prospect of triggering rise in surplus supplies of Group II mid- and heavy-viscosity grades in the meantime, and of light grades when supply returns to normal..· US Group III base oils supply from overseas sources could tighten in response to lower prices and recent plant maintenance in South Korea.· South Korea’s April base oils exports to US fall to lowest since May 2020, when pandemic-related lockdowns slashed US demand..· Arrival of South Korean shipments in US in May 2024 show signs of staying low, reflecting slowdown in exports.· US Group III base oils supply from domestic sources could face downward pressure as narrowing Group III premium to Group II prices curbs incentive to produce Group III base oils.· Firmer demand for Group III base oils than Group II base oils could deter any such moves..· Large share of surplus US base oils/lube supplies in Q1 2024 moves to small number of outlets like Mexico and Israel.· US engine oils exports by contrast continue to account for small share of total base oils/lube shipments bound for markets like Europe.· Trend suggests US refiners seek to minimize impact of oversupply on key markets like Europe.· Trend suggests only limited number of outlets are in a position to absorb large volumes of surplus supplies..· US base oils exports to Europe recover in March 2024, with arrival of shipments likely coinciding with completion of Group II plant maintenance work in Netherlands in early Q2 2024..· Prospect of subsequent rise in Europe’s Group II base oils supply in Q2 2024 contrasts with slump in supply in Q1 2024.· Rise in Europe's Group II supply in Q2 2024 contrasts with drop in region’s Group I base oils supply.· Contrasting trends boost attraction for regional blenders to use more Group II base oils in their formulations..· Europe’s dwindling number of Group I units compounds impact of planned or unexpected changes in supply at any of its remaining units.· Europe’s dwindling domestic Group I base oils supply boosts opportunity for plants in markets like central Asia and Middle East to boost shipments to Europe.· Europe’s Group I domestic brightstock price-premium to SN 500 rises to three-month high; its discount to brightstock export prices narrows.· Relative strength of Group I brightstock price suggests recent/ongoing plant shutdowns in Europe are having a larger impact on supply of that grade.· Relative strength of Group I brightstock price suggests blenders face more difficulty finding a substitute for the grade..· Italy’s March Group I base oils output falls year-on-year for second time in three months amid plant closure.· Lower output highlights sustained structural drop in Europe’s Group I supply.· Italy’s base oils exports fall more than 20% in Q1 2024, outpacing the drop in output and contrasting with rise in imports..· Trend suggests the country's drop in supply caused by the plant closure is likely to impact the Group I export market more than its domestic market.· Closure of Group I unit also boosts Italy’s reliance on overseas base oils supplies to cover more of its requirements.· Europe’s Group III base oils supply shows signs of improving in Q2 2024 even with ongoing plant maintenance work in the region.· Europe’s Group III prices stay firm vs US prices, sustaining attraction of moving more shipments to Europe..· Europe remains Turkey’s largest base oils supplier in Q1 2024 even amid rising share of supplies from Russia.· Trend partly reflects Turkey’s rising imports of premium-grade base oils.· Turkey’s imports of premium-grade base oils rise in Q1 2024 year-on-year for fourth straight quarter, contrasting with fall in imports of Group I base oils for second straight quarter..· Turkey’s imports of premium-grade base oils typically account for close to half its total imports.· Premium-grade supplies from Europe account for more than 40% of Turkey’s premium-grade imports in March 2024..· Trend highlights ongoing importance of Turkey as key market for European supplies and of Europe as key source of Turkey’s premium-grade supplies..· Europe’s combined Group I, Group II and Group III base oils supply falls to multi-year low in Feb 2024 amid lower-than-usual availability of all the grades..· Group III base oils accounts for a larger share of Europe’s base oils supply in Feb 2024 after supply rises from Jan 2024.· Group I and Group II base oils’ share falls in Feb 2024 as supply falls from Jan 2024.· Lower supply cushions impact of seasonally-weak demand in Europe in Q1 2024..Americas/EMEA base oils demand outlook: Week of 20 May.Asia base oils supply outlook: Week of 20 May.Global base oils arb outlook: Week of 20 May
· US base oils premium to feedstock/competing fuel prices holds firm, contrasting with ongoing weakness of diesel premium to crude.· Trend sustains attraction for US refiners to maintain or raise base oils output.· US Group II light-grade prices stay firmer than usual relative to other grades and relative to prices in other regions.· Price-strength points to still-tighter availability of Group II light grades relative to other grades.· Firm margins and more limited arbitrage opportunities raise prospect of triggering rise in surplus supplies of Group II mid- and heavy-viscosity grades in the meantime, and of light grades when supply returns to normal..· US Group III base oils supply from overseas sources could tighten in response to lower prices and recent plant maintenance in South Korea.· South Korea’s April base oils exports to US fall to lowest since May 2020, when pandemic-related lockdowns slashed US demand..· Arrival of South Korean shipments in US in May 2024 show signs of staying low, reflecting slowdown in exports.· US Group III base oils supply from domestic sources could face downward pressure as narrowing Group III premium to Group II prices curbs incentive to produce Group III base oils.· Firmer demand for Group III base oils than Group II base oils could deter any such moves..· Large share of surplus US base oils/lube supplies in Q1 2024 moves to small number of outlets like Mexico and Israel.· US engine oils exports by contrast continue to account for small share of total base oils/lube shipments bound for markets like Europe.· Trend suggests US refiners seek to minimize impact of oversupply on key markets like Europe.· Trend suggests only limited number of outlets are in a position to absorb large volumes of surplus supplies..· US base oils exports to Europe recover in March 2024, with arrival of shipments likely coinciding with completion of Group II plant maintenance work in Netherlands in early Q2 2024..· Prospect of subsequent rise in Europe’s Group II base oils supply in Q2 2024 contrasts with slump in supply in Q1 2024.· Rise in Europe's Group II supply in Q2 2024 contrasts with drop in region’s Group I base oils supply.· Contrasting trends boost attraction for regional blenders to use more Group II base oils in their formulations..· Europe’s dwindling number of Group I units compounds impact of planned or unexpected changes in supply at any of its remaining units.· Europe’s dwindling domestic Group I base oils supply boosts opportunity for plants in markets like central Asia and Middle East to boost shipments to Europe.· Europe’s Group I domestic brightstock price-premium to SN 500 rises to three-month high; its discount to brightstock export prices narrows.· Relative strength of Group I brightstock price suggests recent/ongoing plant shutdowns in Europe are having a larger impact on supply of that grade.· Relative strength of Group I brightstock price suggests blenders face more difficulty finding a substitute for the grade..· Italy’s March Group I base oils output falls year-on-year for second time in three months amid plant closure.· Lower output highlights sustained structural drop in Europe’s Group I supply.· Italy’s base oils exports fall more than 20% in Q1 2024, outpacing the drop in output and contrasting with rise in imports..· Trend suggests the country's drop in supply caused by the plant closure is likely to impact the Group I export market more than its domestic market.· Closure of Group I unit also boosts Italy’s reliance on overseas base oils supplies to cover more of its requirements.· Europe’s Group III base oils supply shows signs of improving in Q2 2024 even with ongoing plant maintenance work in the region.· Europe’s Group III prices stay firm vs US prices, sustaining attraction of moving more shipments to Europe..· Europe remains Turkey’s largest base oils supplier in Q1 2024 even amid rising share of supplies from Russia.· Trend partly reflects Turkey’s rising imports of premium-grade base oils.· Turkey’s imports of premium-grade base oils rise in Q1 2024 year-on-year for fourth straight quarter, contrasting with fall in imports of Group I base oils for second straight quarter..· Turkey’s imports of premium-grade base oils typically account for close to half its total imports.· Premium-grade supplies from Europe account for more than 40% of Turkey’s premium-grade imports in March 2024..· Trend highlights ongoing importance of Turkey as key market for European supplies and of Europe as key source of Turkey’s premium-grade supplies..· Europe’s combined Group I, Group II and Group III base oils supply falls to multi-year low in Feb 2024 amid lower-than-usual availability of all the grades..· Group III base oils accounts for a larger share of Europe’s base oils supply in Feb 2024 after supply rises from Jan 2024.· Group I and Group II base oils’ share falls in Feb 2024 as supply falls from Jan 2024.· Lower supply cushions impact of seasonally-weak demand in Europe in Q1 2024..Americas/EMEA base oils demand outlook: Week of 20 May.Asia base oils supply outlook: Week of 20 May.Global base oils arb outlook: Week of 20 May
