· US base oils supply likely to face upward pressure from firm margins for light grades, prospect of drop in shipments to Mexico and slowdown in flows to Brazil.· Arbitrage to move surplus US supplies to India stays hard to work without discounted prices.· Recent weakness of US export Group II heavy-grade prices points to more supply pressure on that segment of the market.· Firmer heavy-grade prices had partially compensated for previous weakness of light-grade prices.· Weaker heavy-grade margins and more limited outlets for the supplies could prompt refiners to adjust production accordingly.· US Group III price premium to Europe prices falls by more than $60/t over past month, remains much higher than in Jan-Sep 2023.· US’ firm Group III price premium to other regions continues to incentivize suppliers to target US with more Group III base oils.· Flow of supplies reaching US from South Korea shows signs of holding firm in Nov and Dec 2023.· Americas/Europe face prospect of more limited Group II arbitrage flows from Asia in Q4 2023 amid more balanced supplies in that region.· Prospect of more limited base oils flows from Asia curbs one source of pressure on Americas/Europe prices..· Americas' August base oils supply edges down from July 2023, rises yoy for first time in seven months.· Relatively steady supply contrasts with seasonal dip in Americas’ demand, triggering rise in surplus supply to thirteen-month high..· Rising surplus increases need for US refiners especially to maintain high exports to maintain balanced stocks..· US’ September base oils imports rise to five-month high on rebound in supplies from Mideast Gulf and Indonesia..· Rise in US’ Group III base oils supplies in Sept 2023 coincides with US auto-workers’ strike action that cut automobile production.· Industrial action compounds slowdown in demand for premium-grade base oils.· Rise in imports follows rebound in US Group III prices relative to prices in other regions.· US Group III prices remain more than $100/t higher than Europe prices, versus discount of around $100/t at start of Q3 2023, ICIS data shows..· US’ September base oils exports to Europe stay low..· Prolonged trend limits build-up of surplus premium-grade supplies in Europe.· Prolonged trend increases European blenders’ reliance on premium-grade supplies from within the region.· Prolonged trend coincides with tighter availability of Group I base oils in Europe.· Trend leaves blenders more exposed to any unexpected disruptions to normal supply flows..· Europe’s Group I export prices stay firm even as domestic prices fall and crude oil prices weaken.· Trend points to still-limited surplus supply of Group I base oils.· Europe’s still-low Group II base oils values versus gasoil and VGO could deter refiners from boosting supply in the region.· Shipments reaching Europe from US in Nov-Dec 2023 show signs of staying lower than usual.· Shipments reaching Europe from Mideast Gulf in Nov-Dec 2023 show signs of staying lower.· Any such slowdown would coincide with relatively lower shipment volumes from Spain so far in Nov 2023.· Extension of such a dynamic would curb volume of Group III supplies in the region.· Europe’s Group III base oils supply climbs in Sept 2023 to six-month high..· Europe’s supply rises as pick-up in shipments from Spain and Asia counter slowdown in imports from Mideast Gulf.· Supply rises even in the face of falling Europe Group III base oils prices versus other regions and versus diesel.· Rising supply points to persistent surplus availability in global market, raises prospect of further pressure on Group III prices..· Europe’s base oils exports to non-EU markets fall sharply in Q2-Q3 2023 yoy..· Drop in shipments coincides with firm Group I prices that keep arbitrage shut.· Drop in shipments coincides with falling regional lube demand in Europe.· Trend points to sharp drop in structural supply because of plant shutdowns and run-cuts.· Europe’s September base oils exports include largest shipment to Singapore in more than two years.· Such flows to southeast Asia could become more regular over the coming months to balance out loss of supplies from Japan..Global base oils - week of Nov 20: Price outlook - margins
· US base oils supply likely to face upward pressure from firm margins for light grades, prospect of drop in shipments to Mexico and slowdown in flows to Brazil.· Arbitrage to move surplus US supplies to India stays hard to work without discounted prices.· Recent weakness of US export Group II heavy-grade prices points to more supply pressure on that segment of the market.· Firmer heavy-grade prices had partially compensated for previous weakness of light-grade prices.· Weaker heavy-grade margins and more limited outlets for the supplies could prompt refiners to adjust production accordingly.· US Group III price premium to Europe prices falls by more than $60/t over past month, remains much higher than in Jan-Sep 2023.· US’ firm Group III price premium to other regions continues to incentivize suppliers to target US with more Group III base oils.· Flow of supplies reaching US from South Korea shows signs of holding firm in Nov and Dec 2023.· Americas/Europe face prospect of more limited Group II arbitrage flows from Asia in Q4 2023 amid more balanced supplies in that region.· Prospect of more limited base oils flows from Asia curbs one source of pressure on Americas/Europe prices..· Americas' August base oils supply edges down from July 2023, rises yoy for first time in seven months.· Relatively steady supply contrasts with seasonal dip in Americas’ demand, triggering rise in surplus supply to thirteen-month high..· Rising surplus increases need for US refiners especially to maintain high exports to maintain balanced stocks..· US’ September base oils imports rise to five-month high on rebound in supplies from Mideast Gulf and Indonesia..· Rise in US’ Group III base oils supplies in Sept 2023 coincides with US auto-workers’ strike action that cut automobile production.· Industrial action compounds slowdown in demand for premium-grade base oils.· Rise in imports follows rebound in US Group III prices relative to prices in other regions.· US Group III prices remain more than $100/t higher than Europe prices, versus discount of around $100/t at start of Q3 2023, ICIS data shows..· US’ September base oils exports to Europe stay low..· Prolonged trend limits build-up of surplus premium-grade supplies in Europe.· Prolonged trend increases European blenders’ reliance on premium-grade supplies from within the region.· Prolonged trend coincides with tighter availability of Group I base oils in Europe.· Trend leaves blenders more exposed to any unexpected disruptions to normal supply flows..· Europe’s Group I export prices stay firm even as domestic prices fall and crude oil prices weaken.· Trend points to still-limited surplus supply of Group I base oils.· Europe’s still-low Group II base oils values versus gasoil and VGO could deter refiners from boosting supply in the region.· Shipments reaching Europe from US in Nov-Dec 2023 show signs of staying lower than usual.· Shipments reaching Europe from Mideast Gulf in Nov-Dec 2023 show signs of staying lower.· Any such slowdown would coincide with relatively lower shipment volumes from Spain so far in Nov 2023.· Extension of such a dynamic would curb volume of Group III supplies in the region.· Europe’s Group III base oils supply climbs in Sept 2023 to six-month high..· Europe’s supply rises as pick-up in shipments from Spain and Asia counter slowdown in imports from Mideast Gulf.· Supply rises even in the face of falling Europe Group III base oils prices versus other regions and versus diesel.· Rising supply points to persistent surplus availability in global market, raises prospect of further pressure on Group III prices..· Europe’s base oils exports to non-EU markets fall sharply in Q2-Q3 2023 yoy..· Drop in shipments coincides with firm Group I prices that keep arbitrage shut.· Drop in shipments coincides with falling regional lube demand in Europe.· Trend points to sharp drop in structural supply because of plant shutdowns and run-cuts.· Europe’s September base oils exports include largest shipment to Singapore in more than two years.· Such flows to southeast Asia could become more regular over the coming months to balance out loss of supplies from Japan..Global base oils - week of Nov 20: Price outlook - margins
