· US base oils price premium to feedstock/heating oil prices extends rise.· Rising base oils values and falling diesel values add to incentive for refiners to maintain or increase base oils output.· Firmer US base oils export prices narrow their discount to prices in key outlets like Latin America, Europe and India.· Less attractive arbitrage suggests producers face less pressure to clear surplus volumes.· Export prices stay unusually wide relative to domestic prices, suggesting recent improvement in export prices reflects more balanced domestic supply rather than stronger overseas demand.· US Group III supplies from Asia could tighten over coming weeks amid signs of slowdown in delivery of shipments from South Korea in May 2024..· More balanced supply in Q2 2024 would follow signs that US market avoided a major build-up of surplus volumes in Q1 2024 amid steady wave of exports as well as lower imports.· US’ February base oils supply edges down as slump in imports outweighs recovery in output..· Trend leaves US refiners with larger share of domestic supply to cover demand..· Displacement of imports points to rising domestic supply of Group III base oils.· Trend could continue amid attraction for domestic refiners to tap firmer domestic Group III prices compared with Group II export prices.· Prospect of domestic refiners covering more of US’ Group III base oils demand requirements puts pressure on overseas Group III suppliers to target other markets instead.· Overseas suppliers had previously targeted US market because of its high Group III prices relative to other markets.· Overseas suppliers face prospect of lower margins with any prolonged need to target other markets instead.· Prospect of subsequent rise in Group III supply in those other markets could add to price pressure in those markets. .· Europe’s limited Group I supply set to tighten further following closure of Group I unit in Italy.· Europe’s Group I supplies already show signs of tightening in Q1 2024 even as blenders held off replenishing stocks.· Blenders’ low stocks at start of Q2 2024 compound the tightness.· Trend boosts attraction for suppliers in markets like US and Saudi Arabia to move more Group I shipments to Europe if arbitrage is open.· There are signs of some such supplies moving to Europe from overseas markets.· Europe’s tightening Group I supply increases incentive for buyers in markets like Africa to arrange more regular flows from other sources.· There are signs of growing number of such shipments to those markets from other sources like Russia, China and US.· Europe’s Group II base oils supply shows signs of smaller-than-usual build-up of surplus volumes in Q1 2024, ahead of pick-up in demand in Q2 2024.· Europe’s Group III base oils supply shows signs of improving following recent arrival of shipments from Middle East and Asia.· Several more shipments are set to arrive in coming week.· Spain’s premium-grade base oils exports to northwest Europe hold above 30,000 tonnes in April 2024 for fourth time in five months..· Netherlands’ February base oils output falls to twenty-one-month low as plant maintenance work begins..· Lower output and firm exports in Feb 2024 trigger fall in the Netherlands’ base oils/lube stocks to eight-month low.· Trend likely leaves the country with lower-than-usual stocks at start of Q2 2024, when regional demand faces a seasonal rise.· Firmer demand and tighter supply typically gives refiners more leverage over prices.· Netherlands’ supply likely to improve in Q2 2024 following scheduled resumption of normal Group II base oils production in the country in April 2024.· Group II suppliers could also face less price leverage because of increasingly competitive prices and improving availability of Group III base oils..· UK’s February base oils supply lags demand for fourth time in five months..· Signs of more frequent supply tightness in markets like UK add to incentive for buyers outside Europe to seek to line up supplies from other sources instead.· Trend provides valuable opportunity for producers in other regions in a structurally oversupplied market..Americas/EMEA base oils demand outlook: Week of 6 May.Global base oils margins outlook: Week of 6 May.Global base oils arb outlook: Week of 6 May.Asia base oils supply outlook: Week of 6 May
· US base oils price premium to feedstock/heating oil prices extends rise.· Rising base oils values and falling diesel values add to incentive for refiners to maintain or increase base oils output.· Firmer US base oils export prices narrow their discount to prices in key outlets like Latin America, Europe and India.· Less attractive arbitrage suggests producers face less pressure to clear surplus volumes.· Export prices stay unusually wide relative to domestic prices, suggesting recent improvement in export prices reflects more balanced domestic supply rather than stronger overseas demand.· US Group III supplies from Asia could tighten over coming weeks amid signs of slowdown in delivery of shipments from South Korea in May 2024..· More balanced supply in Q2 2024 would follow signs that US market avoided a major build-up of surplus volumes in Q1 2024 amid steady wave of exports as well as lower imports.· US’ February base oils supply edges down as slump in imports outweighs recovery in output..· Trend leaves US refiners with larger share of domestic supply to cover demand..· Displacement of imports points to rising domestic supply of Group III base oils.· Trend could continue amid attraction for domestic refiners to tap firmer domestic Group III prices compared with Group II export prices.· Prospect of domestic refiners covering more of US’ Group III base oils demand requirements puts pressure on overseas Group III suppliers to target other markets instead.· Overseas suppliers had previously targeted US market because of its high Group III prices relative to other markets.· Overseas suppliers face prospect of lower margins with any prolonged need to target other markets instead.· Prospect of subsequent rise in Group III supply in those other markets could add to price pressure in those markets. .· Europe’s limited Group I supply set to tighten further following closure of Group I unit in Italy.· Europe’s Group I supplies already show signs of tightening in Q1 2024 even as blenders held off replenishing stocks.· Blenders’ low stocks at start of Q2 2024 compound the tightness.· Trend boosts attraction for suppliers in markets like US and Saudi Arabia to move more Group I shipments to Europe if arbitrage is open.· There are signs of some such supplies moving to Europe from overseas markets.· Europe’s tightening Group I supply increases incentive for buyers in markets like Africa to arrange more regular flows from other sources.· There are signs of growing number of such shipments to those markets from other sources like Russia, China and US.· Europe’s Group II base oils supply shows signs of smaller-than-usual build-up of surplus volumes in Q1 2024, ahead of pick-up in demand in Q2 2024.· Europe’s Group III base oils supply shows signs of improving following recent arrival of shipments from Middle East and Asia.· Several more shipments are set to arrive in coming week.· Spain’s premium-grade base oils exports to northwest Europe hold above 30,000 tonnes in April 2024 for fourth time in five months..· Netherlands’ February base oils output falls to twenty-one-month low as plant maintenance work begins..· Lower output and firm exports in Feb 2024 trigger fall in the Netherlands’ base oils/lube stocks to eight-month low.· Trend likely leaves the country with lower-than-usual stocks at start of Q2 2024, when regional demand faces a seasonal rise.· Firmer demand and tighter supply typically gives refiners more leverage over prices.· Netherlands’ supply likely to improve in Q2 2024 following scheduled resumption of normal Group II base oils production in the country in April 2024.· Group II suppliers could also face less price leverage because of increasingly competitive prices and improving availability of Group III base oils..· UK’s February base oils supply lags demand for fourth time in five months..· Signs of more frequent supply tightness in markets like UK add to incentive for buyers outside Europe to seek to line up supplies from other sources instead.· Trend provides valuable opportunity for producers in other regions in a structurally oversupplied market..Americas/EMEA base oils demand outlook: Week of 6 May.Global base oils margins outlook: Week of 6 May.Global base oils arb outlook: Week of 6 May.Asia base oils supply outlook: Week of 6 May
