· US base oils prices mostly stay in narrow range vs VGO prices, contrast with surging premium to VGO this time a year ago.· Margins hold in narrow range this year even as extensive round of plant maintenance tightens supply.· Supply could face additional disruption from markets like Canada, depending on impact and reaction to imposition of any US tariffs.· Mostly range-bound base oils margins suggest supply remains sufficient to cover domestic base oils requirements.· Ongoing flow of shipments to outlets like West Africa suggests surplus supply remains sufficient to put together such cargoes.· US domestic Group II light-grade premium to export prices widens to highest in more than five months.· US domestic Group II light-grade discount to Group II N600 tightens to narrowest in almost five months..· Dynamic points to tighter domestic availability of light grades, muted overseas demand for additional supplies..· US Group III base oils supply set to get boost from delivery of several large shipments from South Korea and Middle East in H1 April 2025.· Cargoes would follow surge in shipments from those markets reaching US in March 2025..· US and Europe could face further pick-up in Group III shipments from Middle East to balance out signs of more protracted slowdown in shipments to Asia.· Slowdown in shipments to Asia coincides with rise in China’s Group III base oils output.· US already accounts for more than 40% of global Group III imports from Middle East in the three months to Jan 2025..· US share is similar to 2024 and up from less than 35% in 2023.· Europe accounts for close to 30% of Group III shipments from Middle East in three months to Jan 2025, up from 24% share in 2024 and 26% in 2023.· Any further rise in US and Europe share of shipments, without any drop in total supply, could add to pressure on Group III base oils fundamentals in both markets..· Argentina’s base oils output accounts for more than 65% of country’s supply in Jan-Feb 2025..· Share rises from than 60% of total supply in 2024 and less than 50% in 2023.· Share could fall if any extension of revival in Argentina’s lube demand triggers pick-up in requirements for supplies from overseas markets.· Share could hold steady if concern about impact of any tariffs on costs and trade flows prompts buyers to minimize exposure to supplies from overseas markets..· Europe’s Group I base oils supply could stay balanced-to-tight amid signs of more limited build-up of surplus volumes at start of year, followed by seasonal pick-up in demand.· Firmer demand and blenders’ low stocks would magnify impact of lower production capacity and any plant maintenance work in coming weeks. · Group I base oils output among some of Europe’s major producers rises to four-month high in Jan 2025..· Output still falls from year-earlier levels for fifth month.· Shutdown of Turkey’s Group I unit in Jan 2025 for second month curbs pick-up in supply.· US Group I exports to Europe dwindle in late-2024 and early this year, further trimming any regional supply surplus..· Europe’s Group II base oils supply likely to be more readily available early this year vs H1 2024, when plant maintenance slashed regional output.· Lower-than-usual shipments from US to Europe at end-2024 and early this year could curb pick-up in supply.· Increasingly regular flow of large shipments from Netherlands to Singapore could also limit size of pick-up in supply..· Europe’s Group III base oils supply could get boost from shipment of two large cargoes from Spain to northwest Europe in March 2025..· Cargoes boost shipments from Spain to northwest Europe to highest in seven months..· Sustained rise in shipments to Nigeria from US and UK helps to keep surplus supply more manageable in both source-markets at end-2024 and early this year..· UK shipments to Nigeria account for unusually large share of Europe’s exports to the West African country in H2 2024 and early this year..· Dynamic points to tighter surplus availability in continental Europe even during winter months.· Any extension of dynamic would point to growing importance of UK as key source of European supplies for markets like Nigeria.· Markets like Kenya remain much more reliant on base oils supplies from Europe as surplus US supplies mostly move to West Africa..· East Africa markets like Kenya could be attractive target-markets for suppliers like Middle East, India and Singapore as new production capacity starts up in those markets in the coming months..Americas/EMEA base oils demand outlook: Week of 31 March.Global exports to Africa rise in January .Argentina’s Feb base oils supply rises.Asia base oils supply outlook: Week of 31 March.Global base oils margins outlook: Week of 31 March
