· Americas’ base oils supply likely to stay more plentiful amid lack of scheduled plant maintenance work.· Weakening base oils prices versus feedstock/competing fuel prices incentivize refiners to trim run-rates.· Weaker heavy-grade prices versus light grades erode key support for maintaining higher run-rates.· US base oils market shows signs of avoiding major supply-build at end-2023, pointing to active moves to curb supply..· US’ November base oils output falls to five-month low despite completion of scheduled Group I plant maintenance work.· Output falls despite lack of any scheduled paraffinic plant maintenance work.· Lower output points to unscheduled production issues and moves to trim run-rates.· Any such moves would have coincided with fall in US export prices premium to feedstock and heating oil prices.· Slump in US export prices for heavy grades in Nov-Dec 2023 added to incentive for refiners to trim output.· US’ lower base oils output in Nov 2023 counters impact of higher imports, keeping total supply lower than usual..· Lower supply contrasts with surge in US exports, leaving supply lagging demand for the sixth time in seven months..· Sustained drop in supply delays typical supply-build at year-end, leaves US base oils stocks much lower than year-earlier levels..· Argentina’s December base oils supply falls, cutting Q4 2023 volumes to lowest since late-2020..· Shrinking supply mirrors slowdown in lube demand, limiting build-up of surplus supplies.· Lack of supply-build likely to support steady, even if lower demand.· Shrinking supply/demand boosts need for domestic/overseas suppliers to boost share of total supply to limit impact of slowdown.· Competitive prices and relative logistical proximity leave US suppliers better positioned to boost share of Argentina’s lower supply..· Europe’s Group I supply surplus likely to be smaller than year-earlier levels after signs of slide in availability at end-2023.· Europe’s more limited availability complicates region’s ability to cover supply-tightness in Asia-Pacific market.· Europe’s more limited surplus availability and complication of shipments to Asia boost attraction of moving any surplus volumes to markets like Africa.· There were signs of some supplies moving from Europe to Asia, but via southern Africa rather than Suez Canal, extending journey time.· Europe’s Group I supply could get a boost from additional shipments from Saudi Arabia.· Europe’s Group II base oils supply likely gets a boost from regional and overseas markets.· Europe’s Group III base oils supply likely to remain more reliant on shipments from regional producers as cargoes from Asia and Mideast Gulf take longer to arrive.· Netherlands’ November base oils output recovers to more typical levels, boosting supply..· Netherlands’ November base oils supply almost matches demand, curbing build-up of surplus supplies at year-end..· Smaller surplus could limit impact of surge in shipments from US to Europe in late-2023.· Shipments likely to leave Europe well supplied with Group II base oils at start of 2024..· UK’s base oils output halts in Nov 2023, following sharp slowdown in production in Oct 2023.· UK absorbs wave of supplies from Europe in Nov 2023 to cover shortfall.· UK’s base oils supply still lags demand in Nov 2023 for third time in four months..· UK’s supply shortfall, and absorption of larger volumes from Europe, help to limit regional supply-build at end-2023.· Group I supply in Mideast Gulf could tighten as growing preference to avoid Red Sea complicates flow of supplies of Russian origin to the region.· Group I supply in Mideast Gulf already faces slowdown in shipments from Asia.· Trend increases importance of supplies of Iranian origin..Americas/EMEA base oils - week of Feb 5: Demand outlook.Asia base oils - week of Feb 5: Supply outlook.Global base oils - week of Feb 5: Price outlook - arbitrage.Global base oils - week of Feb 5: Price outlook - margins
· Americas’ base oils supply likely to stay more plentiful amid lack of scheduled plant maintenance work.· Weakening base oils prices versus feedstock/competing fuel prices incentivize refiners to trim run-rates.· Weaker heavy-grade prices versus light grades erode key support for maintaining higher run-rates.· US base oils market shows signs of avoiding major supply-build at end-2023, pointing to active moves to curb supply..· US’ November base oils output falls to five-month low despite completion of scheduled Group I plant maintenance work.· Output falls despite lack of any scheduled paraffinic plant maintenance work.· Lower output points to unscheduled production issues and moves to trim run-rates.· Any such moves would have coincided with fall in US export prices premium to feedstock and heating oil prices.· Slump in US export prices for heavy grades in Nov-Dec 2023 added to incentive for refiners to trim output.· US’ lower base oils output in Nov 2023 counters impact of higher imports, keeping total supply lower than usual..· Lower supply contrasts with surge in US exports, leaving supply lagging demand for the sixth time in seven months..· Sustained drop in supply delays typical supply-build at year-end, leaves US base oils stocks much lower than year-earlier levels..· Argentina’s December base oils supply falls, cutting Q4 2023 volumes to lowest since late-2020..· Shrinking supply mirrors slowdown in lube demand, limiting build-up of surplus supplies.· Lack of supply-build likely to support steady, even if lower demand.· Shrinking supply/demand boosts need for domestic/overseas suppliers to boost share of total supply to limit impact of slowdown.· Competitive prices and relative logistical proximity leave US suppliers better positioned to boost share of Argentina’s lower supply..· Europe’s Group I supply surplus likely to be smaller than year-earlier levels after signs of slide in availability at end-2023.· Europe’s more limited availability complicates region’s ability to cover supply-tightness in Asia-Pacific market.· Europe’s more limited surplus availability and complication of shipments to Asia boost attraction of moving any surplus volumes to markets like Africa.· There were signs of some supplies moving from Europe to Asia, but via southern Africa rather than Suez Canal, extending journey time.· Europe’s Group I supply could get a boost from additional shipments from Saudi Arabia.· Europe’s Group II base oils supply likely gets a boost from regional and overseas markets.· Europe’s Group III base oils supply likely to remain more reliant on shipments from regional producers as cargoes from Asia and Mideast Gulf take longer to arrive.· Netherlands’ November base oils output recovers to more typical levels, boosting supply..· Netherlands’ November base oils supply almost matches demand, curbing build-up of surplus supplies at year-end..· Smaller surplus could limit impact of surge in shipments from US to Europe in late-2023.· Shipments likely to leave Europe well supplied with Group II base oils at start of 2024..· UK’s base oils output halts in Nov 2023, following sharp slowdown in production in Oct 2023.· UK absorbs wave of supplies from Europe in Nov 2023 to cover shortfall.· UK’s base oils supply still lags demand in Nov 2023 for third time in four months..· UK’s supply shortfall, and absorption of larger volumes from Europe, help to limit regional supply-build at end-2023.· Group I supply in Mideast Gulf could tighten as growing preference to avoid Red Sea complicates flow of supplies of Russian origin to the region.· Group I supply in Mideast Gulf already faces slowdown in shipments from Asia.· Trend increases importance of supplies of Iranian origin..Americas/EMEA base oils - week of Feb 5: Demand outlook.Asia base oils - week of Feb 5: Supply outlook.Global base oils - week of Feb 5: Price outlook - arbitrage.Global base oils - week of Feb 5: Price outlook - margins
