Europe Aug Grp III base oils supply rises

Europe’s Group III base oils supply rose in August to its highest in more than six years on the back of a surge in shipments from the Mideast Gulf.

Premium-grade supplies of more than 180,000t in August rose from an already high 158,650t the previous month and by more than 20pc from year-earlier levels, government and port data showed.

The rise in August volumes lifted total supply to around 1.14mn t in the first eight months of the year.

The volume was less than 0.5pc lower than year-earlier levels of 1.15mn t. It was up more than 25pc from less than 893,000t during the same period in 2020.

The supplies reflected combined base oils shipments from Group III producers in Europe, Mideast Gulf and Asia-Pacific.

These premium-grade base oils supplies remained high even as European lube demand slowed during the first seven months of the year.

Lube consumption is likely to extend that slowdown over the coming months as high energy costs and rising interest rates squeeze the region’s economic growth.

The firm base oils volumes also contrasted with a sharp slowdown in European base oils production in the first half of the year. The slowdown mostly reflected a drop in output in Italy, Netherlands, and UK.

Base oils output in those markets mostly consists of Group I and Group II base oils.

The steady volumes of these premium-grade base oils partly reflected rising demand for the supplies amid increasingly stringent engine oil specifications.

The steady availability also boosted their attraction in view of the more erratic availability of Group I base oils especially. The increasingly competitive price for the supplies added to their attraction.

Supply in August got a boost from a surge in shipments from the Mideast Gulf.

Flows to Europe were also higher than usual from Asia-Pacific, where weak Chinese demand freed up more supplies to move to other markets.