Americas/EMEA base oils demand outlook: Week of 16 June

·         US base oils demand could get support from expectations of steady-to-higher prices following surge in crude oil prices.

·         Weakening supply-demand fundamentals previously put pressure on adjustment in base oils prices to reflect that dynamic.

·         Concern about exposure to lower prices incentivized buyers to limit their procurement plans.

·         Reduced concern about lower prices incentivizes buyers to maintain steady procurement plans.

·         Those plans likely include procuring additional volumes to cover for any weather-related supply disruptions during Atlantic hurricane season.

·         Overseas demand in more distant markets for US supplies could be more muted as buyers and sellers hold back because of concern about price volatility.

·         US Group III base oils demand could get support from concern about tighter supplies and higher prices.

·         Group III imports from Middle East rise to seven-month high in April 2025, account for more than 65% of total US Group III imports.

·         US’ reliance on Middle East for most of its Group III supplies magnifies impact of plant-maintenance work in the region in Q2 2025.

·         Maintenance work coincides with signs of slowdown in US imports from Middle East in May-June 2025.

·         Plant-maintenance in South Korea in Q2 2025 complicates US buyers’ ability to line up additional volumes from that source to cushion slowdown in supplies from Middle East.

·         Latin America’s base oils demand could be more muted following surge in US exports to the region in March-April 2025.

·         Surge in shipments helps to replenish regional blenders’ stocks at a time when demand shows signs of ebbing in key markets like Brazil.

·         Lower consumption leaves stocks lasting longer, incentivizes blenders to maintain lower inventories.

·         Expectations of pick-up in surplus US supplies in coming months could add to preference to hold back.

·         Signs of persistent flow of surplus US shipments to other markets rather than to South America could conversely support steadier buying interest.

·         Europe’s base oils demand likely to stay cautious as buyers seek sufficient volumes to cover requirements while limiting any build-up of additional supplies.

·         Lube consumption growth stays mixed in early Q2 2025, adding to attraction of maintaining lower stocks.

·         Spain’s lube consumption falls in April 2025 from year-earlier levels, contrasting with rise in demand in other markets like Italy and Portugal.

·         Base oils supply likely to improve in coming weeks as plant maintenance draws to a close.

·         Prospect of improving supply and seasonal slowdown in demand in third quarter adds to attraction of procuring smaller volumes on a need-to basis.

·         Blenders’ lower stocks could magnify market impact of base oils grades facing tighter availability.

·         Demand for Group I SN 500 could get support from its increasingly wide discount to Group II heavy grades.

·         Wide discount could reflect blenders’ switch to using more Group II heavy grades in response to tight availability of Group I SN 500.

·         Any pick-up in availability of Group I SN 500 could reverse that dynamic.

·         Europe Group II heavy-grade price-premium to US and Asia prices stays wider than usual.

·         Wide premium points to strong demand and tight availability of Group II heavy grades, boosts attraction of moving more of those supplies to Europe.