· US domestic base oils price premium to heating oil/feedstock prices falls less sharply so far in Q4 2024 than same time a year ago.· Lower margins and relatively firmer diesel crack spreads increase incentive to trim base oils output.· Slower pace of fall in margins could point to more muted pressure from any surplus supply.· More muted pressure could reflect persistently high export volumes and prices that facilitate high export volumes to limit supply-build.· Increasingly regular flow of US shipments to markets like Nigeria help to cushion impact of slowdown in domestic demand, limiting pace of supply-build.· Shipments to markets like Nigeria suggest priority is to clear the supplies.· US imports of premium-grade base oils likely to see sharp slowdown in Dec 2024 following signs of surge in shipments in Nov 2024.· Slowdown in shipments would help to counter impact of seasonal dip in demand..· Brazil’s base oils supply lags demand in Oct 2024 for second time in three months even as domestic output surges..· Supply shortfall raises prospect of more balanced fundamentals at year-end and start of 2025.· Brazil’s supply-demand fundamentals were also more balanced in most of H2 2023, before surplus surged in Dec 2023 and Q1 2024..· Repeat of that scenario remains feasible in Q1 2025, especially if US market has large volume of surplus supplies to clear from its domestic market.· Any extension of Brazil’s high base oils output would compound build-up of supplies..· Argentina’s base oils supply rises in Oct 2024, holds relatively steady in Jan-Oct 2024 from year-earlier..· Steady supply masks surge in domestic base oils output as share of supply at expense of imports..· Dynamic likely to continue while demand extends fall.· Steady supply in 2024 contrasts with sliding demand.· Dynamic leaves domestic base oils inventories at high levels and triggers unusual export cargo to Brazil in Oct 2024..· Any further moves to ship surplus volumes to overseas markets could quicken drop in inventory levels and speed up subsequent requirement for more imports when demand revives..· US and Asia base oils exports, combined with Europe’s base oils exports to non-EU markets, fall in Sept 2024 to lowest since end-2022..· Drop in shipments coincides with seasonal rise in demand in many key markets at end-Q3 2024.· Lower supply and firmer demand likely leaves blenders in those markets with lower stocks heading into Q4 2024.· Blenders’ lower stocks could cushion size of typical seasonal drop in requirements at year-end, supporting steadier demand..· Europe’s base oils supply shows signs of healthy availability of all grades.· Supply to get further boost following completion of plant maintenance in Q4 2024.· Supply-demand fundamentals incentivize recent shipments from markets like Turkey and US to move to West Africa rather than to Europe.· Healthy availability in Europe follows signs of strong pick-up in supply of Group I and Group II base oils in Q3 2024.· Europe’s Group I base oils supply rises to seventeen-month high in Sept 2024 on surge in UK output, pick-up in imports..· Rise in Group I base oils supply contrasts with fall in Europe’s Group I base oils exports to non-EU markets in Sept 2024 for seventh time in eight months from year-earlier levels..· Rise in supply and fall in exports point to pick-up in regional demand at end-Q3 and/or rise in Group I stocks heading into Q4 2024.· Rise in stocks would precede Group I plant maintenance in Q4 2024 and signs of steady drop in Italy’s base oils output.· Rise in stocks would also coincide with seasonal slowdown in demand in final months of 2024.· Rise in stocks could also precede moves to build then move larger shipments to overseas markets like Africa and southeast Asia during final months of 2024..· Europe’s Group II supply likely to stay readily available amid signs of high regional output and steady import flows.· Netherlands’ base oils output stays higher than usual in Sept 2024 for fourth month..· Output stays persistently higher than usual since restart of Group II unit in the country after maintenance in H1 2024. · Europe’s supply of Group III base oils with full set of OEM approvals shows signs of improving.· Two cargoes of premium-grade base oils move from Spain to northwest Europe in H2 Nov 2024.· Cargoes follow pause in such shipments in month to mid-Nov 2024 and slump in shipments to northwest Europe in Oct 2024.· Drop in imports of Group III base oils without full set of OEM in Sept 2024 was key factor behind steeper drop in Europe’s imports than exports in Sept 2024..· Rise in net exports duly helps to cut Europe’s total base oils supply in Sept 2024..· Drop in Europe’s total supply in Sept 2024 masks rise in region's Group I/Group II base oils supply..Americas/EMEA base oils demand outlook: Week of 2 Dec.Asia base oils supply outlook: Week of 2 Dec.Global base oils margins outlook: Week of 2 Dec .Global base oils arb outlook: Week of 2 Dec.Europe’s September base oils exports fall.Argentina’s Oct base oils supply rises.Brazil’s Oct base oil supply lags demand
· US domestic base oils price premium to heating oil/feedstock prices falls less sharply so far in Q4 2024 than same time a year ago.· Lower margins and relatively firmer diesel crack spreads increase incentive to trim base oils output.· Slower pace of fall in margins could point to more muted pressure from any surplus supply.· More muted pressure could reflect persistently high export volumes and prices that facilitate high export volumes to limit supply-build.· Increasingly regular flow of US shipments to markets like Nigeria help to cushion impact of slowdown in domestic demand, limiting pace of supply-build.· Shipments to markets like Nigeria suggest priority is to clear the supplies.· US imports of premium-grade base oils likely to see sharp slowdown in Dec 2024 following signs of surge in shipments in Nov 2024.· Slowdown in shipments would help to counter impact of seasonal dip in demand..· Brazil’s base oils supply lags demand in Oct 2024 for second time in three months even as domestic output surges..· Supply shortfall raises prospect of more balanced fundamentals at year-end and start of 2025.· Brazil’s supply-demand fundamentals were also more balanced in most of H2 2023, before surplus surged in Dec 2023 and Q1 2024..· Repeat of that scenario remains feasible in Q1 2025, especially if US market has large volume of surplus supplies to clear from its domestic market.· Any extension of Brazil’s high base oils output would compound build-up of supplies..· Argentina’s base oils supply rises in Oct 2024, holds relatively steady in Jan-Oct 2024 from year-earlier..· Steady supply masks surge in domestic base oils output as share of supply at expense of imports..· Dynamic likely to continue while demand extends fall.· Steady supply in 2024 contrasts with sliding demand.· Dynamic leaves domestic base oils inventories at high levels and triggers unusual export cargo to Brazil in Oct 2024..· Any further moves to ship surplus volumes to overseas markets could quicken drop in inventory levels and speed up subsequent requirement for more imports when demand revives..· US and Asia base oils exports, combined with Europe’s base oils exports to non-EU markets, fall in Sept 2024 to lowest since end-2022..· Drop in shipments coincides with seasonal rise in demand in many key markets at end-Q3 2024.· Lower supply and firmer demand likely leaves blenders in those markets with lower stocks heading into Q4 2024.· Blenders’ lower stocks could cushion size of typical seasonal drop in requirements at year-end, supporting steadier demand..· Europe’s base oils supply shows signs of healthy availability of all grades.· Supply to get further boost following completion of plant maintenance in Q4 2024.· Supply-demand fundamentals incentivize recent shipments from markets like Turkey and US to move to West Africa rather than to Europe.· Healthy availability in Europe follows signs of strong pick-up in supply of Group I and Group II base oils in Q3 2024.· Europe’s Group I base oils supply rises to seventeen-month high in Sept 2024 on surge in UK output, pick-up in imports..· Rise in Group I base oils supply contrasts with fall in Europe’s Group I base oils exports to non-EU markets in Sept 2024 for seventh time in eight months from year-earlier levels..· Rise in supply and fall in exports point to pick-up in regional demand at end-Q3 and/or rise in Group I stocks heading into Q4 2024.· Rise in stocks would precede Group I plant maintenance in Q4 2024 and signs of steady drop in Italy’s base oils output.· Rise in stocks would also coincide with seasonal slowdown in demand in final months of 2024.· Rise in stocks could also precede moves to build then move larger shipments to overseas markets like Africa and southeast Asia during final months of 2024..· Europe’s Group II supply likely to stay readily available amid signs of high regional output and steady import flows.· Netherlands’ base oils output stays higher than usual in Sept 2024 for fourth month..· Output stays persistently higher than usual since restart of Group II unit in the country after maintenance in H1 2024. · Europe’s supply of Group III base oils with full set of OEM approvals shows signs of improving.· Two cargoes of premium-grade base oils move from Spain to northwest Europe in H2 Nov 2024.· Cargoes follow pause in such shipments in month to mid-Nov 2024 and slump in shipments to northwest Europe in Oct 2024.· Drop in imports of Group III base oils without full set of OEM in Sept 2024 was key factor behind steeper drop in Europe’s imports than exports in Sept 2024..· Rise in net exports duly helps to cut Europe’s total base oils supply in Sept 2024..· Drop in Europe’s total supply in Sept 2024 masks rise in region's Group I/Group II base oils supply..Americas/EMEA base oils demand outlook: Week of 2 Dec.Asia base oils supply outlook: Week of 2 Dec.Global base oils margins outlook: Week of 2 Dec .Global base oils arb outlook: Week of 2 Dec.Europe’s September base oils exports fall.Argentina’s Oct base oils supply rises.Brazil’s Oct base oil supply lags demand
