Europe’s June base oils supply edges up

Base oils supply from eight countries in Europe rose in June from a more-than-three-year low the previous month.

But the volume remained lower than usual and coincided with a slowdown in shipments to the region from other key sources like US, Mideast Gulf and South Korea.

Total base oils supply of 297,860t in June rose by 14pc from 261,660t the previous month, government data showed.

The supplies mostly originated from western and southern Europe.

The May volume had been the lowest since early 2019.

The June volume was still the fourth lowest in the past two years and fell from year-earlier levels for an eighth straight month.

The trend cut total base oils supplies to 1.76mn t in the first half of the year. The volume was down by more than 600,000t, or 26pc, from 2.38mn t during the same period last year.

Supply fell because of a prolonged plant shutdown in Italy and persistently lower output in the Netherlands and UK.

A drop in shipments of Russian origin compounded the regional supply tightness, especially of Group I base oils.

The drop in supplies and rise in Group I base oils prices prompted buyers to seek alternative premium-grade supplies instead. Prices for premium grades rose less steeply than Group I prices.

Supply of theses grades from Spain was more plentiful.

But Europe-bound supplies from Mideast Gulf and South Korea were also tighter during the first half of the year.

Tight supply in first-half 2021 had also triggered a rise in regional base oils prices and a surge in their premium to crude and diesel.

The premium of European base oils prices to crude and diesel was much lower this year than last year, even with supply lower than year-ago levels.

The lower base oil premium versus diesel partly reflected the strength of diesel prices.

It also reflected weakening regional lube demand during the first half of this year.

Last year’s tighter supply coincided with a strong recovery in regional lube demand.