Global surplus narrows as demand outpaces supplyStrong US and Asia demand keeps fundamentals balanced-to-tightSmaller surplus heading into Q4 could ease competition for export markets.The global base oils market saw its supply surplus shrink in September as consumption rose faster than supply.Total supply held above 2.90 million tonnes, near a three-year high, but demand jumped more than 10% year-on-year, outpacing the 3% increase in supply..Global Base Oils Supply Stays Near Three-Year High in September.Strong US demand fuelled a rise in consumption in the Americas market for a third straight month, leaving fundamentals balanced-to-tight in markets such as the US and Brazil..US September Base Oil Demand Rises – Highest Q3 Volume in 6 Years.In Asia, lube consumption rose in September for a third month, helping limit any build-up of surplus supply..Asia’s September lube demand rises.Europe’s lube demand held steadier for a second month even as regional supply slipped.With demand growth consistently exceeding supply in the three months to September, the base oils supply surplus fell to its second-lowest third-quarter level in five years..A smaller supply-overhang could ease competition for overseas markets during the final months of the year, when seasonally slower demand typically makes surplus supply harder to place. .The lack of any significant changes in regional base oils price-spreads so far in the fourth quarter reflects this tighter dynamic.Any respite is likely to be temporary. Competition for export markets is set to intensify next year as global supply gets a boost from the start-up of a wave of new production capacity.The rise in supply is likely to trigger an increase in surplus volumes even if demand continues to grow.
