· US Group II base oils price premium extends fall vs heating oil/feedstock prices.· US base oils premium typically extends fall during final months of the year and at start of new year as surplus supply pressures prices.· An avoidance of large supply surplus would ease pressure on prices, curbing size of fall in base oils premium.· Recent plant maintenance work and wave of shipments to typical arbitrage outlets starting in Q3 2024 show signs of slowing any supply-build so far in Q4 2024.· More feasible arbitrage to markets like India, especially for heavy grades, could spur additional shipments to those markets..· US supply surplus still likely to growth in face of synchronized, steep seasonal fall in demand in most key markets at year-end.· Global base oils output faces no such similar slowdown at year-end..· US set to take delivery of wave of shipments from South Korea in month to late-Nov 2024.· Large cargo of Group III base oils from UAE also scheduled to arrive in late-Nov 2024.· Shipments set to arrive at time of year when distributors and blenders are cutting stocks ahead of year-end slowdown.· Surge in shipments follows slowdown in shipment arrivals from South Korea in month to late-Oct 2024..· Global base oils exports to key markets in Africa rise to seven-month high in Aug 2024 on surge in shipments from US..· Rise in US shipments highlights early moves to clear surplus volumes from US during Q3 2024.· Volatility of US shipments to Africa contrasts with steadier flows from Europe..· Steadier flows from Europe boost attraction of shipments from that market for buyers seeking regular supplies.· Global exports to Nigeria rise to eight-month high in Aug 2024..· Pick-up in shipments adds to signs of improving availability in US and Europe markets..· Europe’s base oils supply likely to increasingly outpace demand over coming months, especially for premium grades.· Europe’s Group I base oils supply shows signs of exceeding regional requirements.· Europe’s lower Group I export prices reflect that dynamic.· Europe’s Group I export prices remain at levels that make arbitrage hard to work, suggesting size of any surplus volumes remains limited.· Europe’s Group I base oils exports to markets outside the region fall in Aug 2024 for sixth time in seven months from year-earlier levels..· Group I exports to markets outside Europe extend trend of falling at faster pace than Europe’s total exports to markets outside Europe.· Trend likely reflects Europe’s shrinking supply of Group I base oils and rising availability of premium-grade base oils.· Trend could also reflect waning overseas demand for Group I base oils from Europe as buyers target premium-grade base oils or Group I supplies from other sources at more competitive prices..· Europe’s premium-grade base oils supply gets support from signs of firm output and high imports.· Europe’s Group II light-grade price premium to US prices narrows in past week after widening sharply since early-Sept 2024..· Any extension of that downward price move could point to already-sufficient supplies in European market.· Any extension of that price move could start to curb attraction of moving surplus supplies from US to Europe.· Spain’s exports of premium-grade shipments to northwest Europe typically consist of two large cargoes each month.· Spain’s exports to northwest Europe consist of one such cargo so far this month.· Drop in exports coincides with plant maintenance work in Spain, could tighten Europe’s supplies of Group III base oils with full set of OEM approval..· Asia’s share of global base oils exports to Middle East continues to expand in 2024 amid rise in total shipments to the region and dwindling supplies from Europe..· Trend magnifies impact of any slowdown in shipments from Asia to the region, such as in Sept 2024.· Trend also provides Asia refiners with key and growing outlet for their supplies.· That trend could change again, with new base oils production capacity set to start up in India in coming year.· Rising supply likely to trigger growing competition for outlets like Middle East..Americas/EMEA base oils demand outlook: Week of 28 Oct.Asia base oils supply outlook: Week of 28 Oct.Global base oils arb outlook: Week of 28 Oct.Global base oils margins outlook: Week of 28 Oct.Global exports to Africa rise in August.Global base oils exports to Middle East fall in August.Base Oil News stories and analysis also available on ICIS platform
