Europe May base oil supply falls from Netherlands, US

European base oils supply from Netherlands production and US exports fell in May to a three-month low at a time when regional lube demand was rising.

Base oils exports from the US to Europe rose to a record high in May.

The rise in shipments coincided with a drop in the Netherlands’ base oils production to a 20-month low.

The lower output outweighed the rise in exports.

The total volume of the Netherlands’ base oils and lube production combined with US exports to Europe fell to 125,180t in May, government data showed.

The volume fell from 171,410t the previous month and from average levels of more than 160,000 t/yr in the year to May.

The total volume from the same two sources came to 699,430t in the first five months of the year. The volume was down 15pc from 821,150t during the same period last year.

The Netherlands and the US are Europe’s key sources for Group II base oils.

The drop in supplies coincided with lower-than-expected availability of Group I base oils in Europe in the first half of the year.

Group I base oils prices rose more than Group II prices in response to the supply tightness.

The tight supply and higher prices incentivized blenders to seek more Group II base oils instead.

But availability of the premium-grade supplies was also tighter than usual.

Supplies from the US accounted for some 55pc of the total volume from the US and Netherlands combined in the first five months of the year.

Supplies from the Netherlands had previously accounted for more than half of the total volume in 2020 and 2021.

US base oils exports to Europe previously enjoyed an exemption of the EU’s 3.7pc import tax. The volume of supplies that enjoyed that exemption has shrunk steadily in recent years.

Rising demand in other markets like Latin America have added to the attraction of moving more US supplies to other markets.