· US base oils prices stay in relatively narrow range versus feedstock prices since late last year..· Range-bound price-differentials contrast with more volatile margins in most of 2024, pointing to steadier supply-demand fundamentals so far this year.· Range-bound margins likely incentivize refiners to maintain steady output.· Steady output and seasonal slowdown in demand maintain importance of high export volumes to avoid large build-up of surplus supplies.· Domestic supply could face additional pressure following fire at major US blending plant, raising prospect of slowdown in demand from that buyer.· US supply could face additional pressure from signs of pick-up in surplus volumes in growing number of other overseas markets.· Arbitrage remains open to multiple markets such as Europe..· Signs of steady spot volumes to India, even with prices at lower levels, could point to moves to avoid oversupply-situation in Europe.· Arbitrage from Asia to Americas stays hard to work, limiting additional flows and competition from that market for now..· Overseas Group III base oils shipments to US could rise over coming months following completion of heavy round of plant-maintenance in Middle East and Asia in Q2 2025.· US Group III base oils supply likely to rise in Sept 2025 following arrival of several large shipments from Middle East.· Rise in supply would follow signs of lower-than-usual volume of Group III shipments reaching US in Aug 2025.· South Korea’s base oils exports to US stay low in July 2025, reflecting that dynamic..· Slowdown in US shipment-arrivals in Aug 2025 would help to balance out impact of seasonal slowdown in domestic demand.· Rise in shipments reaching US in Sept 2025 would help to replenish stocks and meet post-summer pick-up in demand.· Dynamic increases importance of that pick-up in demand..· Latin America’s base oils supply likely to stay sufficient to cover requirements.· More muted demand likely to leave existing inventories lasting longer.· Supply likely to get further support from pick-up in surplus shipments from overseas markets in Q3 2025.· Rise in South Korea’s exports to Latin America in July 2025 reflects that dynamic..· Latin America’s supply-balance stays tight through 1H 2025..· Tight supply boosts pressure on buyers to seek replenishment volumes.· Persistently balanced-to-tight supply suggests that buyers may be more comfortable with current dynamic, and that they are confident they can secure replenishment volumes as and when required..· Europe’s Group I base oils supply likely to get support from firm margins that incentivize refiners to maintain high output.· High output at time of year when demand faces seasonal slowdown could trigger faster and larger pick-up in surplus supplies.· Recent shipment of Group I base oils from Europe to Nigeria points to such a pick-up in surplus supply during Q3 2025.· Europe domestic Group I SN 150 price-premium to export price rises to widest level in more than a year, pointing to growing surplus volumes of light grades especially..· Europe’s Group I light and heavy-grade export prices fall relative to CFR UAE prices to lowest level in more than a year..· Europe’s Group I export prices stay higher than CFR UAE prices even after recent fall, complicating arbitrage opportunities.· Even so, increasingly narrow Europe price-premium could trigger pick-up in negotiations to line up surplus volumes to move to a region where availability of SN 500 is tighter than usual..· Europe’s Group II base oils supply likely to be readily available amid steady regional output and healthy import-volumes from other markets.· Europe’s Group II base oils imports rise to thirteen-month high in June 2025, reflecting that dynamic..· Imports rise ahead of seasonal slowdown in region’s demand during summer months.· Supply could get further boost from still-wide-open arbitrage to moves more shipments to Europe from US and Asia.· Supply could get additional support from any slowdown in requirements for Europe shipments in overseas markets following expected start of exports from new unit in Singapore in coming weeks..· Europe’s Group III base oils supply shows signs of holding in narrow range even as plant-maintenance impacts shipments from different markets in recent months.· Europe’s Group III supply stays in narrow range in June 2025 for fourth month..· Supply holds steady as rise in shipments from Middle East balances out drop in flows from Spain and Asia.· Supply shows signs of staying at similar levels in July 2025 as recovery in shipments from Spain and Asia cushions any slowdown from Middle East.· Supply from Asia and Spain shows signs of holding at firmer levels in August 2025. · Europe’s steady supplies contrast with US’ more volatile Group III base oils supply..· Dynamic partly reflects US’ almost-total reliance on imports to cover Group III requirements.· Regional Group III production in Europe covers significant portion of its requirements, leaving it less reliant than US on supplies from overseas markets..Latin America’s June lube demand falls.Europe June Group III supply holds firm.Asia base oils supply outlook: Week of 25 August.Global base oils arb outlook: Week of 25 August.Base Oil News stories and analysis also available on ICIS platform
