· US domestic base oils margins face more pressure as feedstock costs keep rising.· Signs of easing supply surplus and improving demand in US give refiners more leverage to pass on higher feedstock costs rather than cut production.· Firmer US export prices cushion impact of weak domestic margins.· Growing volume of US base oils exports in recent months magnifies benefit of higher export prices.· Trend incentivizes refiners to maintain output and raise domestic prices.· Firmer US export prices could curb arbitrage opportunities, complicating moves to clear surplus volumes.· Firmer US export prices suggest there are fewer surplus volumes to clear for now.· Export prices rise after slumping throughout most of Q1 2024 amid persistent surplus supply throughout that period..· US paraffinic base oils output holds relatively firm in Jan 2024 even with sharp drop in US’ total refinery run-rates..· Output holds firm in Jan 2024 even with increasingly-squeezed US base oils prices relative to feedstock and diesel prices and relative to prices in other regions.· Steady output coincides with typical slowdown in base oils demand at start of year and precedes swathe of arbitrage shipments through rest of Q1 2024 to clear surplus volumes.· Swathe of arbitrage shipments and persistent price-pressure highlight repercussion of steady-to-firm output at end-2023 and early 2024.· Signs of some ongoing arbitrage shipments from US through April 2024 coincide with firmer domestic demand, trimming supply further..· Brazil’s February base oils supply surplus stays higher than usual but falls sharply from previous two months..· Surplus falls after country’s base oil imports revert to more typical levels in Feb 2024, down from unusually high levels in H2 2023.· Slowdown in Brazil’s shipments adds to pressure on US refiners with surplus supplies in Q1 2024.· Prospect of steadier import requirements over coming months coincides with signs of lower US supply surplus in early Q2 2024.· Brazil’s steadier demand and US’ smaller surplus could provide further support for US export prices..· Europe’s Group I base oils supply faces prospect of tightening further over coming months, following signs of a smaller-than-usual surplus early this year.· Still-weak domestic Group I base oils prices versus VGO curb incentive for refiners to raise output.· UK’s January base oils supply lags demand by largest amount in seven months..· Lower UK supply coincides with surge in exports to markets in Africa to seven-month high, contrasting with low volumes bound for Europe..· Drop in UK’s January base oils output coincides with lower Group I output in Italy and Spain.· Dynamic compounds drop in regional Group I supply in early 2024, cushioning impact of seasonal slowdown in demand.· Any seasonal pick-up in demand over coming weeks could magnify signs of lack of any significant build-up of Group I supplies in early 2024. .· Europe’s Group II base oils supply likely to get a boost over coming weeks following recent restart of Group II unit in the Netherlands.· Plant maintenance work in the Netherlands in Q1 2024 extends a period of lower-than-usual Group II base oils supply in Europe in late 2023 and early 2024..· Base oils output from the Netherlands stays lower than usual in Jan 2024 even ahead of maintenance work in the country. · Europe’s lower supply cushions impact of seasonal slowdown in regional demand at start of 2024.· Europe’s lower-than-usual Group II supply in Q1 2024 increases region’s reliance on US to cover Group II requirements during that period.· That reliance is likely to ebb following completion of maintenance.· Rising US export prices could curb further the flow of shipments from that market to Europe..· Europe’s Group III base oils supply could tighten as plant maintenance work begins in Finland.· US Group III base oil premium to Europe prices narrows in recent weeks to lowest since Sept 2023.· Trend could boost attraction of moving more overseas Group III shipments to Europe rather than the US.· Spain’s March exports of premium-grade base oils from port of Cartagena rise to three-month high..· Shipments to northwest Europe fall to lowest since Nov 2023..Americas/EMEA base oils demand outlook: Week of April 8.Asia base oils demand outlook: Week of April 8.Global base oils margins outlook: Week of April 8.Global base oils arb outlook: Week of April 8
· US domestic base oils margins face more pressure as feedstock costs keep rising.· Signs of easing supply surplus and improving demand in US give refiners more leverage to pass on higher feedstock costs rather than cut production.· Firmer US export prices cushion impact of weak domestic margins.· Growing volume of US base oils exports in recent months magnifies benefit of higher export prices.· Trend incentivizes refiners to maintain output and raise domestic prices.· Firmer US export prices could curb arbitrage opportunities, complicating moves to clear surplus volumes.· Firmer US export prices suggest there are fewer surplus volumes to clear for now.· Export prices rise after slumping throughout most of Q1 2024 amid persistent surplus supply throughout that period..· US paraffinic base oils output holds relatively firm in Jan 2024 even with sharp drop in US’ total refinery run-rates..· Output holds firm in Jan 2024 even with increasingly-squeezed US base oils prices relative to feedstock and diesel prices and relative to prices in other regions.· Steady output coincides with typical slowdown in base oils demand at start of year and precedes swathe of arbitrage shipments through rest of Q1 2024 to clear surplus volumes.· Swathe of arbitrage shipments and persistent price-pressure highlight repercussion of steady-to-firm output at end-2023 and early 2024.· Signs of some ongoing arbitrage shipments from US through April 2024 coincide with firmer domestic demand, trimming supply further..· Brazil’s February base oils supply surplus stays higher than usual but falls sharply from previous two months..· Surplus falls after country’s base oil imports revert to more typical levels in Feb 2024, down from unusually high levels in H2 2023.· Slowdown in Brazil’s shipments adds to pressure on US refiners with surplus supplies in Q1 2024.· Prospect of steadier import requirements over coming months coincides with signs of lower US supply surplus in early Q2 2024.· Brazil’s steadier demand and US’ smaller surplus could provide further support for US export prices..· Europe’s Group I base oils supply faces prospect of tightening further over coming months, following signs of a smaller-than-usual surplus early this year.· Still-weak domestic Group I base oils prices versus VGO curb incentive for refiners to raise output.· UK’s January base oils supply lags demand by largest amount in seven months..· Lower UK supply coincides with surge in exports to markets in Africa to seven-month high, contrasting with low volumes bound for Europe..· Drop in UK’s January base oils output coincides with lower Group I output in Italy and Spain.· Dynamic compounds drop in regional Group I supply in early 2024, cushioning impact of seasonal slowdown in demand.· Any seasonal pick-up in demand over coming weeks could magnify signs of lack of any significant build-up of Group I supplies in early 2024. .· Europe’s Group II base oils supply likely to get a boost over coming weeks following recent restart of Group II unit in the Netherlands.· Plant maintenance work in the Netherlands in Q1 2024 extends a period of lower-than-usual Group II base oils supply in Europe in late 2023 and early 2024..· Base oils output from the Netherlands stays lower than usual in Jan 2024 even ahead of maintenance work in the country. · Europe’s lower supply cushions impact of seasonal slowdown in regional demand at start of 2024.· Europe’s lower-than-usual Group II supply in Q1 2024 increases region’s reliance on US to cover Group II requirements during that period.· That reliance is likely to ebb following completion of maintenance.· Rising US export prices could curb further the flow of shipments from that market to Europe..· Europe’s Group III base oils supply could tighten as plant maintenance work begins in Finland.· US Group III base oil premium to Europe prices narrows in recent weeks to lowest since Sept 2023.· Trend could boost attraction of moving more overseas Group III shipments to Europe rather than the US.· Spain’s March exports of premium-grade base oils from port of Cartagena rise to three-month high..· Shipments to northwest Europe fall to lowest since Nov 2023..Americas/EMEA base oils demand outlook: Week of April 8.Asia base oils demand outlook: Week of April 8.Global base oils margins outlook: Week of April 8.Global base oils arb outlook: Week of April 8
