· US base oils prices fall vs feedstock/competing fuel prices in response to lower outright prices, higher crude oil prices.· Base oils premium to feedstock/competing fuel prices stay high even after falling over past week.· High base oils premium implies tight supply, firm demand fundamentals.· Any disconnect between supply-demand fundamentals and high base oils premium could put pressure on further price adjustments.· Base oils price premium to feedstock/competing fuel prices already falls more sharply than in Europe and Asia, pointing to more of such a disconnect in US than in those other markets.· Lower-than-expected number of storms so far during Atlantic hurricane season raises prospect of larger-than-usual volume of surplus supply.· Another storm could form and move towards the Gulf of Mexico over the coming week.· Group II base oils supply surplus could be smaller than expected amid high shipments to Mexico during Q3 2024, combined with steady flows to markets like India.· Plant maintenance in Q4 2024 could also curb size of any surplus.· Increasingly firm Group I base oils prices relative to Group II base oils points to tight supply/strong demand fundamentals.· Lack of any posted price-cut for Group I base oils adds to signs of firm fundamentals.· Another cargo moves from US to northwest Europe in Sept 2024, likely adding to tighter Group I supply..· US Group III base oils supply set to get further boost, with South Korea’s exports to US climbing to eight-month high in Aug 2024..· Rise in shipments extends rebound in South Korea’s base oils exports to US in Q3 2024.· Rise in shipments could reflect moves to maintain or expand share of US’ Group III base oils market.· Shipments rise despite US’ weak supply-demand fundamentals and low Group III prices vs Group II and vs other regions.· Rise in shipments could incentivize some domestic refiners to revert to producing more Group II base oils. .· US continues to take attract larger-than-usual shipment volumes from Europe in Q3 2024..· Europe’s exports of almost 26,000 tonnes to US in June-July 2024 almost match exports of little more than 26,000 tonnes to US in Jan-July 2023.· Americas supply could get further boost from signs of ongoing arbitrage shipments from Asia..· Europe’s Group I base oils supply could be tighter than expected in the coming weeks following last week’s refinery fire in Greece.· Greece’s base oils exports to Europe almost double in H1 2023 from previous year, before rising further 10% in H1 2024, highlighting growing importance of country's supplies for regional market..· Europe’s Group II base oils supply shows signs of staying higher at start of Q3 2024.· Europe’s imports of base oils from key Group II sources rise in July 2024 to second-highest level in two years on strong pick-up in flows from US..· Rise in imports in July 2024 likely to coincide with steady regional Group II base oils output at higher levels.· Group II imports likely fell in Aug 2024 amid dip in exports from US..· Europe’s Group III base oils supply could tighten in Q4 2024 as scheduled plant maintenance work in the region cuts output.· Impact of the shutdown could be more muted after South Korea’s exports to Europe surge to three-year high in Aug 2024..· The shipments should help to partially cover for the drop in regional production..· Europe’s Group III base oils supply already stayed in a narrow range in July 2024 for fourth straight month.· Steady supply contrasts with pick-up in US Group III base oil imports in June-July 2024..· Shipments to US rise despite Group III prices at increasingly wide discount to Europe prices.· Overseas refiners’ focus on US suggests the market has additional attractions that compensate for lower price.· Repercussion is to prolong pressure on US Group III prices and to curb pressure on Europe Group III prices..· Supplies in Middle East set to get boost as South Korea’s exports to the region rise to five-month high in Aug 2024..· Rise in shipments replenishes stocks, gives buyers more leverage to hold off locking in additional supplies..· Saudi Arabia’s base oils exports from Yanbu and Jeddah stay higher in Aug 2024, with shipments showing signs of holding firm in Sept 2024..· Steady volumes at high levels provide increasingly key source for markets everywhere from the Mediterranean region to northwest Europe and from India to southeast Asia.· Dynamic could change when new base oils production capacity starts to come online in Asia-Pacific over coming year..Americas/EMEA base oils demand outlook: Week of 23 Sept.Asia base oils supply outlook: Week of 23 Sept.Global base oils margins outlook: Week of 23 Sept.Global base oils arb outlook: Week of 23 Sept.S Korea’s Aug base oils exports rise to US, Europe
