· US base oils price premium to feedstock/competing fuel prices extends rise.· Diesel premium to crude oil stays close to lowest in past year.· Rising base oils premium and weaker motor fuel premium to crude oil adds to incentive for refiners to maximise base oils output.· Sustained incentive to boost base oils output points to tighter availability in short term, raises prospect of strong recovery in supply.· Tighter supply curbs sellers’ need to target export markets with surplus volumes in short term.· US Group II export prices duly resume faster recovery than domestic prices, narrowing their discount to domestic prices..· Higher export prices raise prospect of sharper pick-up in surplus supplies because of less feasible arbitrage to overseas outlets.· Exports accounted for more than 50% of total US base oils demand over past year.· Large export volumes over past year limited build-up of surplus supplies.· Any slowdown in exports would require large rebound in US’ domestic demand to sustain supply-demand balance.· US Group III base oils supply from overseas markets could tighten amid signs of ongoing slowdown in shipments from Asia.· US Group III prices stay at steep discount to Europe prices, curbing attraction of moving shipments to the US from other markets like Middle East.· Narrowing US Group III price premium to Group II prices curbs incentive for domestic refiners to produce Group III base oils instead of Group II base oils..· Europe’s tighter structural supply of Group I base oils magnifies impact of any unexpected plant shutdowns.· Europe’s tighter structural Group I supply triggers sustained rise in Group I export prices that continues to outpace firmer domestic prices.· Rising Group I export prices complicate further the arbitrage to outlets like Middle East and India.· Trend suggests higher export prices reflect tighter supply more than any pick-up in overseas demand.· Europe’s base oils exports to non-EU markets fall in March 2024 and in Q1 2024 year-on-year for fourth straight quarter..· Europe’s base oils exports to non-EU markets fall in Q1 2024 to second-lowest level for that period in the last six years.· Exports fell even ahead of closure of Group I base oils unit in Italy.· Europe’s base oils exports likely to continue to trend lower, especially for Group I base oils, as refiners focus on covering regional demand..· Healthy global availability of Group II base oils by contrast cushions impact of any planned or unexpected supply disruptions of the grade.· Europe’s steady Group II supply and multiple sources of the grade from other regions contrast with its tighter Group I supply.· Steady supply and narrower price premium to Group I base oils boost incentive for blenders to use more Group II base oils in their formulations.· Europe’s Group III base oils supply shows signs of extending recovery through Q2 2024.· Europe’s March Group III base oils supply rises to two-year high on rebound in shipments from Middle East and Asia..· Rise in Group III supplies contrasts with unusually low volumes in Jan-Feb 2024.· Rise in supplies boosts availability of premium grades during Group II plant maintenance in Europe in March 2024, Group III plant maintenance in Q2 2024.· Supplies could stay firmer as Europe Group III prices maintain steep premium to US prices, incentivizing overseas refiners to move more shipments to Europe in Q2 2024..· Base oils shipments from Saudi ports of Yanbu and Jeddah combined rise to markets west of Suez Canal in April 2024 even as total shipment volumes fall from March 2024..· Trend cushions slowdown in export volumes from Saudi Arabia in Jan-April 2024, supports rising flows to outlets in Africa and Europe.· Trend taps drop in Europe’s Group I base oils production supply and the region’s growing difficulty of covering Group I requirements in domestic and overseas markets.· Trend cuts reliance on UAE and India markets ahead of expected surge in base oils production capacity in India over coming year.· Trend leaves UAE more reliant on other sources for now to cover its base oils requirements..· Global base oils exports to Middle East could face slowdown in Q2 2024.· Shipments from Asia to Middle East slip to four-month low in April 2024.· Shipments slow after surge in global base oils exports to Middle East in February and March 2024 leaves region with plentiful supplies, pressuring prices..· Shipments to Middle East could slow in Q2 2024 amid less attractive arbitrage and as tighter supply in US and seasonal pick-up in demand in Europe curb surplus volumes from those markets.· Any slowdown in flows from those markets could increase demand for supplies from Asia in the coming months..Americas/EMEA base oils demand outlook: Week of 27 May.Asia base oils supply outlook: Week of 27 May.Global base oils arb outlook: Week of 27 May.Global base oils margins outlook: Week of 27 May
· US base oils price premium to feedstock/competing fuel prices extends rise.· Diesel premium to crude oil stays close to lowest in past year.· Rising base oils premium and weaker motor fuel premium to crude oil adds to incentive for refiners to maximise base oils output.· Sustained incentive to boost base oils output points to tighter availability in short term, raises prospect of strong recovery in supply.· Tighter supply curbs sellers’ need to target export markets with surplus volumes in short term.· US Group II export prices duly resume faster recovery than domestic prices, narrowing their discount to domestic prices..· Higher export prices raise prospect of sharper pick-up in surplus supplies because of less feasible arbitrage to overseas outlets.· Exports accounted for more than 50% of total US base oils demand over past year.· Large export volumes over past year limited build-up of surplus supplies.· Any slowdown in exports would require large rebound in US’ domestic demand to sustain supply-demand balance.· US Group III base oils supply from overseas markets could tighten amid signs of ongoing slowdown in shipments from Asia.· US Group III prices stay at steep discount to Europe prices, curbing attraction of moving shipments to the US from other markets like Middle East.· Narrowing US Group III price premium to Group II prices curbs incentive for domestic refiners to produce Group III base oils instead of Group II base oils..· Europe’s tighter structural supply of Group I base oils magnifies impact of any unexpected plant shutdowns.· Europe’s tighter structural Group I supply triggers sustained rise in Group I export prices that continues to outpace firmer domestic prices.· Rising Group I export prices complicate further the arbitrage to outlets like Middle East and India.· Trend suggests higher export prices reflect tighter supply more than any pick-up in overseas demand.· Europe’s base oils exports to non-EU markets fall in March 2024 and in Q1 2024 year-on-year for fourth straight quarter..· Europe’s base oils exports to non-EU markets fall in Q1 2024 to second-lowest level for that period in the last six years.· Exports fell even ahead of closure of Group I base oils unit in Italy.· Europe’s base oils exports likely to continue to trend lower, especially for Group I base oils, as refiners focus on covering regional demand..· Healthy global availability of Group II base oils by contrast cushions impact of any planned or unexpected supply disruptions of the grade.· Europe’s steady Group II supply and multiple sources of the grade from other regions contrast with its tighter Group I supply.· Steady supply and narrower price premium to Group I base oils boost incentive for blenders to use more Group II base oils in their formulations.· Europe’s Group III base oils supply shows signs of extending recovery through Q2 2024.· Europe’s March Group III base oils supply rises to two-year high on rebound in shipments from Middle East and Asia..· Rise in Group III supplies contrasts with unusually low volumes in Jan-Feb 2024.· Rise in supplies boosts availability of premium grades during Group II plant maintenance in Europe in March 2024, Group III plant maintenance in Q2 2024.· Supplies could stay firmer as Europe Group III prices maintain steep premium to US prices, incentivizing overseas refiners to move more shipments to Europe in Q2 2024..· Base oils shipments from Saudi ports of Yanbu and Jeddah combined rise to markets west of Suez Canal in April 2024 even as total shipment volumes fall from March 2024..· Trend cushions slowdown in export volumes from Saudi Arabia in Jan-April 2024, supports rising flows to outlets in Africa and Europe.· Trend taps drop in Europe’s Group I base oils production supply and the region’s growing difficulty of covering Group I requirements in domestic and overseas markets.· Trend cuts reliance on UAE and India markets ahead of expected surge in base oils production capacity in India over coming year.· Trend leaves UAE more reliant on other sources for now to cover its base oils requirements..· Global base oils exports to Middle East could face slowdown in Q2 2024.· Shipments from Asia to Middle East slip to four-month low in April 2024.· Shipments slow after surge in global base oils exports to Middle East in February and March 2024 leaves region with plentiful supplies, pressuring prices..· Shipments to Middle East could slow in Q2 2024 amid less attractive arbitrage and as tighter supply in US and seasonal pick-up in demand in Europe curb surplus volumes from those markets.· Any slowdown in flows from those markets could increase demand for supplies from Asia in the coming months..Americas/EMEA base oils demand outlook: Week of 27 May.Asia base oils supply outlook: Week of 27 May.Global base oils arb outlook: Week of 27 May.Global base oils margins outlook: Week of 27 May
