Europe’s Nov Group III supply stays low

Europe’s Group III base oils supplies stayed unusually low in November as a dip in availability within the region coincided with a sustained slowdown in shipments from Mideast Gulf.

A pick-up in shipments from Asia-Pacific cushioned the slowdown.

Regional supply showed signs of improving in December and early this year on the back of a rise in shipments from the Mideast Gulf and Spain and steady flows from South Korea.

The tighter supply in October and November coincided with and helped to counter a seasonal slowdown in Europe’s lube demand during the final months of last year.

Europe’s Group III base oils prices firmed relative to Group I and Group II base oils in the fourth quarter of the year, reflecting those stronger fundamentals.

Prices continued to hold firm in recent weeks even as supply began to improve and as Group I and Group II prices faced further pressure.

Europe’s supplies of more than 115,000t in November rose from less than 110,000t the previous month, government and port data showed.

The November volume was still well below typical levels of more than 143,000 t/month over the past year.

The drop in volumes compounded a longer-term trend of falling Group III base oils supplies in Europe last year even as demand for the product continued to grow.

The region’s total supply of 1.52mn t in the first eleven months of the year fell by 8pc from 1.66mn t during the same period in 2021.

A 27pc rise in shipments from Spain in the first eleven months of the year helped to partially counter a 22pc fall in supplies from the Mideast Gulf.

The rise in shipments highlighted the growing importance of supplies from Spain for the region and the larger impact of any slowdown in those shipments.

A slowdown in the country’s shipments duly materialized in November, compounding the impact of the drop in supplies from the UAE and Bahrain.

The regional tightness showed signs of peaking in October and November before easing over the following months.

A pick-up in shipments from Spain in December coincided with the shipment of a wave of cargoes from the Mideast Gulf.