Europe’s Oct base oils supply improves

Base oils supply from eight countries in Europe rose to a three-month high in October on the back of higher output in Italy, UK and Netherlands.

The rise in supplies contrasted with unusually weak lube demand in the region in October.

The diverging supply-demand fundamentals increased surplus availability and put growing pressure on regional base oils prices.

Falling base oils prices added to blenders’ reluctance to procure more supplies, compounding the rising surplus.

Concern about weak demand and lower prices extended into the start of this year and exacerbated the price impact of any surplus supplies.

Supply was still much lower than usual.

The imminent loss of base oils supplies of Russian origin was set to cut availability even more.

Base oils supply of more than 355,000t in October rose from close to 320,000t in September to a three-month high.

Supply still fell for a twelfth-month from year-earlier levels, cutting total volumes to 3.14mn t in the first ten months of the year.

The volume was down 22pc from 4.04mn t during the same period in 2021.

The lower supply mostly reflected a slump in base oils output in markets like Netherlands, Italy and UK during the first half of the year.

A drop in base oils imports from Russia and a recovery in regional lube demand compounded the drop in availability.

Regional base oils prices surged in response.

Supply recovered in the second half of the year on the back of rising output in Italy and the Netherlands especially.

Firmer output in those markets in October countered a drop in supply from northern Europe because of scheduled plant maintenance work.  

A rise in US shipments to Europe in October added to the pick-up in supply.

The improving availability coincided with weaker lube demand, especially of industrial oils.

Regional base oils prices fell sharply in the fourth quarter of the year, reflecting those diverging supply-demand fundamentals.