· US export base oils price premium to feedstock and competing fuel prices stays unusually low.· Fall in US base oils margins so far this year incentivizes refiners to trim output.· US domestic base oils premium to feedstock/competing fuel prices stays much firmer than export prices.· US domestic Group II heavy-grade premium to light grades holds at narrowest in more than a year but stays much higher than usual.· Trend curbs pressure on refiners to trim output despite growing importance and size of export market for US supplies..· Sustained wave of offers of US shipments for export points to ongoing surplus.· Trend points to limited or insufficient moves by refiners to cut output.· Sustained wave of offers of US shipments for export helps to slow pace of any supply-build in domestic market.· Domestic supply still faces upward pressure as lack of scheduled plant maintenance work supports base oils output at higher levels unless refiners trim run-rates.· Surge in US base oils output to seven-month high in Dec 2023 reflects speed at which domestic supply rises without any maintenance work or run-cuts..· Trend suggests US base oils exports likely to remain at higher levels unless domestic demand revives or US output falls.· Surge in US base oils imports in Dec 2023 highlight attraction of moving Group III base oils to the US.· Widening US Group III premium to Europe prices so far this year adds to that attraction.· Signs of pick-up in supplies reaching US from Mideast Gulf in March would partially counter prospect of slowdown in shipments from northeast Asia..· Argentina’s January base oils output rises to six-month high, while imports slide..· Argentina’s currency devaluation and falling lube demand boosts attraction of securing more supplies from domestic market, and of procuring smaller volumes for more prompt delivery.· Trend shows signs of exacerbating fall in demand for overseas base oils supplies in response to drop in domestic lube consumption.· Trend coincides with pick-up in Brazil’s domestic base oils output and Mexico’s tighter rules on base oils imports.· Net effect is rise in regional supplies and drop in demand for base oils imports, especially from the US..· Europe’s weak base oils values vs feedstock/competing fuel prices incentivizes refiners to limit surplus supply.· Weak heavy-grade values relative to light grades adds to pressure on refiners’ margins and to incentive to reduce output.· Open arbitrage to move Group I supplies to Asia raises prospect of tightening regional supplies further.· Europe’s Group I base oils supply set to tighten further when plant in Italy closes.· Spain’s December Group I base oils supply rises to eleven-month high, adding to signs of recovery in Europe’s Group I supply at end-2023..· Pick-up in Group I supply partially balances out slump in regional supply in Nov 2023..· Italy’s base oils stocks fall in Oct 2023 and Nov 2023, reflecting the tighter supply in Q4 2023..· Trend leaves market with smaller-than-usual supply-overhang carried into start of 2024.· Europe’s subsequent domestic Group I price weakness in Feb 2024 adds to refiners’ incentive to maintain lower output or trim production further..· Europe’s Group II base oils supply likely to remain more reliant on shipments from US at least through to start of Q2 2024.· Group II plant maintenance in Europe in Q1 2024 follows signs of dip in regional supply of Group II base oils in Q4 2023.· Netherlands’ base oils output falls to nineteen-month low in Dec 2023, compounding dip in regional supply..· Fall in output follows similar drop in production in Oct 2023. Slowdown cuts Netherlands’ Q4 base oils output to lowest in more than two years.· Netherlands’ fall in output in Q4 2023 raises prospect of complicating any moves to build inventories ahead of plant maintenance work the country in Q1 2024..· Europe’s tighter supply of Group II base oils creates welcome outlet for surplus supplies from US.· Europe’s tighter supply of Group II base oils could complicate any plans by blenders to consume more of the premium-grade base oils if availability of Group I supplies tightens further..Americas/EMEA base oils demand outlook: Week of March 4.Asia base oils supply outlook: Week of March 4.Global base oils margins outlook: Week of March 4.Global base oils arb outlook: Week of March 4
· US export base oils price premium to feedstock and competing fuel prices stays unusually low.· Fall in US base oils margins so far this year incentivizes refiners to trim output.· US domestic base oils premium to feedstock/competing fuel prices stays much firmer than export prices.· US domestic Group II heavy-grade premium to light grades holds at narrowest in more than a year but stays much higher than usual.· Trend curbs pressure on refiners to trim output despite growing importance and size of export market for US supplies..· Sustained wave of offers of US shipments for export points to ongoing surplus.· Trend points to limited or insufficient moves by refiners to cut output.· Sustained wave of offers of US shipments for export helps to slow pace of any supply-build in domestic market.· Domestic supply still faces upward pressure as lack of scheduled plant maintenance work supports base oils output at higher levels unless refiners trim run-rates.· Surge in US base oils output to seven-month high in Dec 2023 reflects speed at which domestic supply rises without any maintenance work or run-cuts..· Trend suggests US base oils exports likely to remain at higher levels unless domestic demand revives or US output falls.· Surge in US base oils imports in Dec 2023 highlight attraction of moving Group III base oils to the US.· Widening US Group III premium to Europe prices so far this year adds to that attraction.· Signs of pick-up in supplies reaching US from Mideast Gulf in March would partially counter prospect of slowdown in shipments from northeast Asia..· Argentina’s January base oils output rises to six-month high, while imports slide..· Argentina’s currency devaluation and falling lube demand boosts attraction of securing more supplies from domestic market, and of procuring smaller volumes for more prompt delivery.· Trend shows signs of exacerbating fall in demand for overseas base oils supplies in response to drop in domestic lube consumption.· Trend coincides with pick-up in Brazil’s domestic base oils output and Mexico’s tighter rules on base oils imports.· Net effect is rise in regional supplies and drop in demand for base oils imports, especially from the US..· Europe’s weak base oils values vs feedstock/competing fuel prices incentivizes refiners to limit surplus supply.· Weak heavy-grade values relative to light grades adds to pressure on refiners’ margins and to incentive to reduce output.· Open arbitrage to move Group I supplies to Asia raises prospect of tightening regional supplies further.· Europe’s Group I base oils supply set to tighten further when plant in Italy closes.· Spain’s December Group I base oils supply rises to eleven-month high, adding to signs of recovery in Europe’s Group I supply at end-2023..· Pick-up in Group I supply partially balances out slump in regional supply in Nov 2023..· Italy’s base oils stocks fall in Oct 2023 and Nov 2023, reflecting the tighter supply in Q4 2023..· Trend leaves market with smaller-than-usual supply-overhang carried into start of 2024.· Europe’s subsequent domestic Group I price weakness in Feb 2024 adds to refiners’ incentive to maintain lower output or trim production further..· Europe’s Group II base oils supply likely to remain more reliant on shipments from US at least through to start of Q2 2024.· Group II plant maintenance in Europe in Q1 2024 follows signs of dip in regional supply of Group II base oils in Q4 2023.· Netherlands’ base oils output falls to nineteen-month low in Dec 2023, compounding dip in regional supply..· Fall in output follows similar drop in production in Oct 2023. Slowdown cuts Netherlands’ Q4 base oils output to lowest in more than two years.· Netherlands’ fall in output in Q4 2023 raises prospect of complicating any moves to build inventories ahead of plant maintenance work the country in Q1 2024..· Europe’s tighter supply of Group II base oils creates welcome outlet for surplus supplies from US.· Europe’s tighter supply of Group II base oils could complicate any plans by blenders to consume more of the premium-grade base oils if availability of Group I supplies tightens further..Americas/EMEA base oils demand outlook: Week of March 4.Asia base oils supply outlook: Week of March 4.Global base oils margins outlook: Week of March 4.Global base oils arb outlook: Week of March 4