Europe's Sept supply falls from Netherlands, US

European base oils supply from Netherlands production and US exports extended its fall in September to the second-lowest level in almost two years.

The US and the Netherlands are key sources of Group II base oils for the European market.

Supplies fell in September even as regional lube demand revived from a seasonal slowdown in August.

Regional base oils prices fell in September even with the pick-up in demand.

The revival in demand was weaker than usual as blenders preferred to limit their inventory levels in the face of slowing economic activity.

Europe’s Group II base oils prices fell faster than Group I prices in September even with lower supplies. But their premium to Group I prices remained higher than in the first half of the year.

Any recovery in supplies to more typical levels during the final months of the year raised the prospect of putting additional pressure on Group II prices.

The total volume of the Netherlands’ base oils and lube production combined with US exports to Europe fell in September to a seven-month low of little more than 106,000t, government data showed.

The volume was down from an already-low 126,600t the previous month and the second lowest since late 2020.

The low volumes in August and September mostly reflected the impact of a slump in shipments from the US. These fell mostly because of lower-than-usual base oils output in the US during those two months.

The prospect of a recovery in US output to more typical levels would support a pick-up in shipments to Europe during the fourth quarter of the year.

There were signs of such a pick-up in flows from the US to Europe in October. These shipments mostly reached Europe throughout November.

A rise in shipments in the fourth quarter would coincide with signs of persistent surplus supplies of Group I base oils in Europe along with slowing lube demand.