· US base oils supply surplus could build fast if domestic demand ebbs earlier than usual and market avoids major weather-related supply disruptions.· Forecasts show the possibility of another storm forming and heading towards US Gulf of Mexico in coming week.· Expectations of rising US base oils supply add to downward pressure on demand, which adds to rising supply.· Refiners face challenge of halting that cycle.· Dynamic boosts incentive for refiners to trim output and cut attraction of moving more shipments from other markets to the Americas.· Some planned plant maintenance in Q4 2024 set to trim output.· Lower US base oils prices improve but still leave complicated any arbitrage opportunities to move surplus volumes to other markets. · Supply could build fast even if regular shipments to West Africa and India in Q3 2024 slowed pace of build-up of surplus volumes.· Several more Group I cargoes load from US in late Sept 2024 before heading to Europe and West Africa.· Shipments point to price levels that are competitive enough to attract buying interest in overseas markets.· Lower US base oils prices cut attraction of moving additional supplies from Asia and Middle East to Latin America.· Arrival of some such shipments already likely to curb demand in some markets for US supplies..· Argentina’s base oils supply rises to thirteen-month high in Aug 2024 following delivery of large, rare shipment from Saudi Arabia..· Argentina’s steady base oils output and weak demand already curb country’s requirements for base oils imports..· Lower requirements for imports were less problematic for US suppliers when US availability was tighter.· Lower requirements for imports could be more problematic for US suppliers if surplus availability rises over the coming months.· Shipment from Saudi Arabia likely to compound Argentina’s drop in import requirements.· Any arbitrage shipments from Asia would cut further the need for US supplies.· Dynamic highlights importance for US suppliers to remove the attraction for suppliers in other markets to move more shipments to outlets like Argentina..· Less feasible arbitrage to move shipments to US contrasts with increasingly attractive arbitrage to move more Group III base oils to Europe.· Europe sees surge in shipments from Bahrain/UAE compared with US and Asia in July 2024..· Rise in shipments could reflect response to Europe’s steep Group III price premium to prices in Asia and especially US since Q2 2024.· Europe’s Group III price premium to prices in Asia and US widens further during Q3 2024, raising prospect of additional shipments moving to the region over the coming months.· Any such rise in shipments would help to cover for likely drop in regional output because of planned shutdown of Group III unit in Spain for maintenance work.· Spain’s exports of premium-grade base oils show signs of slowing in Sept 2024 even as another cargo moves to northwest Europe at end-Sept 2024.· Slowdown in shipments points to impact of scheduled plant maintenance work even before it begins.· Europe’s Group I base oils supply could face adjustment over coming weeks after lower prices cut refiners’ margins, trim attraction of moving more arbitrage shipments to Europe.· Lower prices are too late to reverse shipments already bound for Europe, including shipment from US set to reach northwest Europe in H1 Oct 2024.· Surplus availability of Group I base oils supply in Europe is already sufficient to move shipment from Mediterranean market to Nigeria in Sept 2024.· Europe’s Group II base oils supply shows signs of extending recovery in Q3 2024 after plant maintenance curbs regional output in H1 2024.· Group II supply could get further boost from increasingly firm base oils prices relative to other regions, especially the US..· Widening Europe Group II premium to US prices boosts attraction of moving surplus US supplies to Europe rather than other outlets like India.· Surplus US cargoes could still target other markets to avoid large build-up of supplies in Europe and subsequent price-impact of any large rise in supplies.· Nigeria’s base oils supply shows signs of improving amid signs of pick-up in spot shipments to the country from US and from northwest Europe.· Rise in shipments to Nigeria points to rising surplus volumes in other markets.· Saudi Arabia’s shipment to Argentina in Q3 2024 is first from the Middle East Gulf country to Argentina in at least four years.· Shipment could reflect moves by Saudi Arabia to further expand its outlets beyond US, Europe, South Africa and Asia..· Global base oils imports from Qatar slump in July 2024, contrasting with steadier flows from Bahrain/UAE..· Drop in Asia’s premium-grade base oils imports from Qatar in Aug 2024 points to more extended slowdown in shipments from the island-state..Americas/EMEA base oils supply outlook: Week of 23 Sept.Asia base oils supply outlook: Week of 30 Sept.Global base oils margins outlook: Week of 30 Sept.Global base oils cargo flows: Week of 30 Sept.Global premium-grade imports from Middle East fall in July.Argentina August base oils supply rises
· US base oils supply surplus could build fast if domestic demand ebbs earlier than usual and market avoids major weather-related supply disruptions.· Forecasts show the possibility of another storm forming and heading towards US Gulf of Mexico in coming week.· Expectations of rising US base oils supply add to downward pressure on demand, which adds to rising supply.· Refiners face challenge of halting that cycle.· Dynamic boosts incentive for refiners to trim output and cut attraction of moving more shipments from other markets to the Americas.· Some planned plant maintenance in Q4 2024 set to trim output.· Lower US base oils prices improve but still leave complicated any arbitrage opportunities to move surplus volumes to other markets. · Supply could build fast even if regular shipments to West Africa and India in Q3 2024 slowed pace of build-up of surplus volumes.· Several more Group I cargoes load from US in late Sept 2024 before heading to Europe and West Africa.· Shipments point to price levels that are competitive enough to attract buying interest in overseas markets.· Lower US base oils prices cut attraction of moving additional supplies from Asia and Middle East to Latin America.· Arrival of some such shipments already likely to curb demand in some markets for US supplies..· Argentina’s base oils supply rises to thirteen-month high in Aug 2024 following delivery of large, rare shipment from Saudi Arabia..· Argentina’s steady base oils output and weak demand already curb country’s requirements for base oils imports..· Lower requirements for imports were less problematic for US suppliers when US availability was tighter.· Lower requirements for imports could be more problematic for US suppliers if surplus availability rises over the coming months.· Shipment from Saudi Arabia likely to compound Argentina’s drop in import requirements.· Any arbitrage shipments from Asia would cut further the need for US supplies.· Dynamic highlights importance for US suppliers to remove the attraction for suppliers in other markets to move more shipments to outlets like Argentina..· Less feasible arbitrage to move shipments to US contrasts with increasingly attractive arbitrage to move more Group III base oils to Europe.· Europe sees surge in shipments from Bahrain/UAE compared with US and Asia in July 2024..· Rise in shipments could reflect response to Europe’s steep Group III price premium to prices in Asia and especially US since Q2 2024.· Europe’s Group III price premium to prices in Asia and US widens further during Q3 2024, raising prospect of additional shipments moving to the region over the coming months.· Any such rise in shipments would help to cover for likely drop in regional output because of planned shutdown of Group III unit in Spain for maintenance work.· Spain’s exports of premium-grade base oils show signs of slowing in Sept 2024 even as another cargo moves to northwest Europe at end-Sept 2024.· Slowdown in shipments points to impact of scheduled plant maintenance work even before it begins.· Europe’s Group I base oils supply could face adjustment over coming weeks after lower prices cut refiners’ margins, trim attraction of moving more arbitrage shipments to Europe.· Lower prices are too late to reverse shipments already bound for Europe, including shipment from US set to reach northwest Europe in H1 Oct 2024.· Surplus availability of Group I base oils supply in Europe is already sufficient to move shipment from Mediterranean market to Nigeria in Sept 2024.· Europe’s Group II base oils supply shows signs of extending recovery in Q3 2024 after plant maintenance curbs regional output in H1 2024.· Group II supply could get further boost from increasingly firm base oils prices relative to other regions, especially the US..· Widening Europe Group II premium to US prices boosts attraction of moving surplus US supplies to Europe rather than other outlets like India.· Surplus US cargoes could still target other markets to avoid large build-up of supplies in Europe and subsequent price-impact of any large rise in supplies.· Nigeria’s base oils supply shows signs of improving amid signs of pick-up in spot shipments to the country from US and from northwest Europe.· Rise in shipments to Nigeria points to rising surplus volumes in other markets.· Saudi Arabia’s shipment to Argentina in Q3 2024 is first from the Middle East Gulf country to Argentina in at least four years.· Shipment could reflect moves by Saudi Arabia to further expand its outlets beyond US, Europe, South Africa and Asia..· Global base oils imports from Qatar slump in July 2024, contrasting with steadier flows from Bahrain/UAE..· Drop in Asia’s premium-grade base oils imports from Qatar in Aug 2024 points to more extended slowdown in shipments from the island-state..Americas/EMEA base oils supply outlook: Week of 23 Sept.Asia base oils supply outlook: Week of 30 Sept.Global base oils margins outlook: Week of 30 Sept.Global base oils cargo flows: Week of 30 Sept.Global premium-grade imports from Middle East fall in July.Argentina August base oils supply rises
