· US base oils spot price premium to feedstock/heating oil prices stays high, extending incentive for refiners to maximise output.· Group II light-grade posted price premium to heating oil stays high even after price-cut.· Weakness of diesel prices adds to attraction of maximising base oils output.· Refiners' recent price-cuts suggest demand-weakness starting to outweigh any supply-tightness.· Recent price-cuts could prompt buyers to hold back, compounding demand weakness and subsequent supply surplus.· Smaller cut to Group II light-grade posted price than other Group II grades points to still-tighter availability of that product relative to other grades.· Any weather-related supply disruptions over coming weeks could have muted impact on demand, as buyers and distributors tap their stocks to cover requirements.· Any such disruptions could help to curb the size of a supply-surplus carried into the final months of the year.· Removal of any surplus supplies likely to remain more difficult with US prices at levels that incentivize buyers in overseas markets to target alternative sources instead..· Brazil’s base oils supply recovers in July 2024 on pick-up in output and imports.· Supply reverts to surplus vs demand in July 2024, helping to replenish stocks and provide buffer in case of any supply disruptions..· Brazil remains more exposed to disruptions to shipments from US in view of its reliance on imports for large share of its supply, and on US for large share of its imports..· Argentina’s base oils supply falls in July 2024 from previous month and from year-earlier levels in face of falling lube demand.· Domestic base oils output accounts for rising share of base oils supply in July 2024 and in Jan-July 2024 at the expense of imports..· Likely extension of that trend set to continue to curb base oils imports, cutting demand for supplies from the US.· Argentina’s base oils stocks rise to highest in more than two years in July 2024, suggesting blenders are tapping lube stocks instead of production to cover demand.· Rising base oils inventories likely to delay impact of any recovery in lube demand as blenders first work down existing stocks..· Europe’s Group I base oils supply holds steady in June 2024, rises in Q2 2024 to highest in more than two years..· Group I supply gets boost from higher output in markets like UK and Italy, despite closure of Group I plant in the country.· Group I supply gets further boost from rise in Group I imports.· Higher Group I supply points to still-firm regional demand for Group I base oils..· Europe’s total base oil exports to non-EU markets, excluding Group I base oils, rises in H1 2024 from year-earlier levels..· Shipments cut further the volume of premium-grade supplies for regional buyers in Europe.· Europe’s Group I base oils exports to non-EU markets slide in H1 2024, boosting Group I supplies for regional buyers in Europe.· Dynamic adds to signs of firm regional demand for Group I base oils and more muted regional demand for premium-grade base oils..· Europe’s Group II base oils supply shows signs of more plentiful availability as rebound in regional output covers for any slowdown in imports.· Widening Europe Group II premium to FOB NE Asia prices boosts feasibility of additional arbitrage flows from Asia.· Europe’s Group III base oils supply could tighten over coming months because of planned maintenance work in Asia and Spain.· Europe’s firmer Group III base oils prices relative to other markets could attract more supplies to the region.· Europe’s premium-grade base oils imports from Middle East lag surge in the region’s shipments to US and Asia in June 2024, even with Europe’s firmer Group III prices..· Europe’s lower imports from Middle East curb Group III supply-build heading into Q3 2024.· Surge in US, Asia imports from Middle East in June 2024 add to their Group III supply heading into Q3 2024, when demand faces seasonal slowdown.· Europe’s Group III base oils prices outperform US and Asia Group III prices during Q3 2024..· Outperformance of Europe prices unlikely to reflect strength of region’s demand.· Outperformance of Europe prices more likely to reflect less pressure from oversupply compared with Asia and US.· Dynamic suggests size of flows from Middle East has large impact on Group III fundamentals and prices in US, Europe and Asia.· Dynamic points to preference among Middle East suppliers to continue to target US and Asia markets even when prices underperform relative to Europe.· Dynamic could in turn limit any pick-up in Group III shipments to Europe in response to its firmer prices..Americas/EMEA base oils demand outlook: Week of 2 Sept.Asia base oils supply outlook: Week of 2 Sept.Global base oils arb outlook: Week of 2 Sept.Global base oils margins outlook: Week of 2 Sept.Argentina’s July base oils output rises.Brazil’s July base oils supply recovers
· US base oils spot price premium to feedstock/heating oil prices stays high, extending incentive for refiners to maximise output.· Group II light-grade posted price premium to heating oil stays high even after price-cut.· Weakness of diesel prices adds to attraction of maximising base oils output.· Refiners' recent price-cuts suggest demand-weakness starting to outweigh any supply-tightness.· Recent price-cuts could prompt buyers to hold back, compounding demand weakness and subsequent supply surplus.· Smaller cut to Group II light-grade posted price than other Group II grades points to still-tighter availability of that product relative to other grades.· Any weather-related supply disruptions over coming weeks could have muted impact on demand, as buyers and distributors tap their stocks to cover requirements.· Any such disruptions could help to curb the size of a supply-surplus carried into the final months of the year.· Removal of any surplus supplies likely to remain more difficult with US prices at levels that incentivize buyers in overseas markets to target alternative sources instead..· Brazil’s base oils supply recovers in July 2024 on pick-up in output and imports.· Supply reverts to surplus vs demand in July 2024, helping to replenish stocks and provide buffer in case of any supply disruptions..· Brazil remains more exposed to disruptions to shipments from US in view of its reliance on imports for large share of its supply, and on US for large share of its imports..· Argentina’s base oils supply falls in July 2024 from previous month and from year-earlier levels in face of falling lube demand.· Domestic base oils output accounts for rising share of base oils supply in July 2024 and in Jan-July 2024 at the expense of imports..· Likely extension of that trend set to continue to curb base oils imports, cutting demand for supplies from the US.· Argentina’s base oils stocks rise to highest in more than two years in July 2024, suggesting blenders are tapping lube stocks instead of production to cover demand.· Rising base oils inventories likely to delay impact of any recovery in lube demand as blenders first work down existing stocks..· Europe’s Group I base oils supply holds steady in June 2024, rises in Q2 2024 to highest in more than two years..· Group I supply gets boost from higher output in markets like UK and Italy, despite closure of Group I plant in the country.· Group I supply gets further boost from rise in Group I imports.· Higher Group I supply points to still-firm regional demand for Group I base oils..· Europe’s total base oil exports to non-EU markets, excluding Group I base oils, rises in H1 2024 from year-earlier levels..· Shipments cut further the volume of premium-grade supplies for regional buyers in Europe.· Europe’s Group I base oils exports to non-EU markets slide in H1 2024, boosting Group I supplies for regional buyers in Europe.· Dynamic adds to signs of firm regional demand for Group I base oils and more muted regional demand for premium-grade base oils..· Europe’s Group II base oils supply shows signs of more plentiful availability as rebound in regional output covers for any slowdown in imports.· Widening Europe Group II premium to FOB NE Asia prices boosts feasibility of additional arbitrage flows from Asia.· Europe’s Group III base oils supply could tighten over coming months because of planned maintenance work in Asia and Spain.· Europe’s firmer Group III base oils prices relative to other markets could attract more supplies to the region.· Europe’s premium-grade base oils imports from Middle East lag surge in the region’s shipments to US and Asia in June 2024, even with Europe’s firmer Group III prices..· Europe’s lower imports from Middle East curb Group III supply-build heading into Q3 2024.· Surge in US, Asia imports from Middle East in June 2024 add to their Group III supply heading into Q3 2024, when demand faces seasonal slowdown.· Europe’s Group III base oils prices outperform US and Asia Group III prices during Q3 2024..· Outperformance of Europe prices unlikely to reflect strength of region’s demand.· Outperformance of Europe prices more likely to reflect less pressure from oversupply compared with Asia and US.· Dynamic suggests size of flows from Middle East has large impact on Group III fundamentals and prices in US, Europe and Asia.· Dynamic points to preference among Middle East suppliers to continue to target US and Asia markets even when prices underperform relative to Europe.· Dynamic could in turn limit any pick-up in Group III shipments to Europe in response to its firmer prices..Americas/EMEA base oils demand outlook: Week of 2 Sept.Asia base oils supply outlook: Week of 2 Sept.Global base oils arb outlook: Week of 2 Sept.Global base oils margins outlook: Week of 2 Sept.Argentina’s July base oils output rises.Brazil’s July base oils supply recovers
