Surge in Group III supplies set to reach US in coming days
Supplies add to recent arrival in US of Group III shipment from Middle East
Group III supplies rise as US demand softens during winter months
South Korea’s base oils exports to the US surged to a one-year high in November, boosting Group III supply just as US lubricant demand faced a seasonal winter slowdown.
Shipments rose to around 59,000 tonnes, up from less than 40,000 tonnes in October and well above typical levels of less than 44,000 tonnes/month seen through most of the year, government data showed.
The supplies included an unusually large cargo that was set to reach the US Gulf coast in the coming week, following the arrival in December of a large shipment that originated from several Middle East producers.
Most of the supplies from South Korea and the Middle East to the US consist of Group III base oils.
The surge in US Group III supplies this month is likely to linger for longer during the winter months.
Shipments surged even as Europe Group III base oils prices maintained a steep premium to US prices through the fourth quarter of the year, while availability in Europe remained relatively balanced.
The arrival of the additional shipments into a seasonally weaker market is likely to maintain pressure on US prices relative to other markets.