Europe Sept Group III imports from Mideast Gulf fall

Europe’s Group III base oils imports from the Mideast Gulf fell in September for the sixth time in seven months as the region covered more of its requirements with domestic supplies.

Increasingly weak European Group III prices relative to prices in the US also boosted the incentive for producers to move more shipments to that market.

The trend looks set to continue over the coming months.

Base oils imports from the UAE and Bahrain combined fell to less than 20,000t in September, from more than 40,000t the previous month, government data showed.

The drop in supplies cut total imports to less than 190,000t in the first nine months of the year. The volume was down 23pc from around 245,000t the same time a year earlier.

The slowdown in shipments coincided with a 33pc surge in exports of premium-grade base oils from Spain this year to a record high.

The rise in supplies more than made up for the drop in imports from the Mideast Gulf.

Europe's high import volume from Bahrain and UAE in August had been an outlier. Imports got a boost that month from a jump in shipments from Bahrain to a 13-month high.

Imports from Bahrain remained higher than usual in September. The high volume cushioned the impact of a slump in supplies from the UAE.

The rise in shipments from Bahrain coincided with maintenance work on a premium-grade base oils plant in northern Europe from the end of the third quarter of the year.

The timing of the shipments suggested moves to cover for the drop in supplies from the plant during its shutdown.

The fall in shipments to Europe from the Mideast Gulf this year contrasted with strong flows from those markets to the US.

US imports from the UAE and Bahrain combined came to around 265,000t in the first nine months of the year. The volume was almost the same as year-earlier levels.

But imports of more than 100,000t from those two sources in the third quarter were a record high.

Europe’s imports from Bahrain and UAE also rose in the third quarter to the highest this year. But they remained lower than year-earlier levels.

The contrasting trends coincided with an increasingly large US Group III price premium to prices in Europe.

Firm domestic demand in that market also contrasted with slowing lube consumption in Europe.

The trend is likely to continue until domestic supply in Europe falls because of factors like plant maintenance work.

The last major round of plant maintenance work in the region was in first-half 2021.