· Seasonal boost in US base oils demand could be more muted than expected, with uncertainty about end-user consumption incentivizing buyers to maintain lower stocks.· Seasonal rise in demand typically cuts surplus supplies and often coincides with plant maintenance work, like this year.· Stronger demand and tighter supply typically give refiners more leverage to adjust prices to reflect those firmer fundamentals.· US outright base oils prices mostly hold steady, while price margins lag sharper rise in margins in Europe and Asia..· Lagging prices point to weaker-than-expected supply-demand fundamentals for time of year.· Demand for base oils supplies that face risk of additional tariff-related costs could get boost as buyers seek to secure additional volumes ahead of such a rise in costs.· Buyers face risk of imposition of tariffs before the supplies reach the US..· Latin America’s base oils demand likely to get seasonal boost, after signs of firm regional consumption so far this year.· Firm consumption limits supply-build late last year and early this year, boosting need to replenish stocks.· Firm consumption contrasts with sustained slowdown in US base oils exports to South America at end-2024 and start of 2025.· Fall in US shipments to Brazil and Argentina is especially steep..· Slump in US exports to Brazil and Argentina likely to squeeze further their tighter supply-demand balance, increasing need for replenishment supplies.· Slump in US exports to Brazil and Argentina contrasts with US’ still-high total base oils and lube exports in late-2024 and early this year.· Dynamic highlights impact of surge in shipments to Mexico and Africa, squeezing availability for other more regular outlets..· Europe’s base oils demand shows signs of getting stronger seasonal boost, with buying interest especially focused on products with tighter availability, such as Group I heavy grades.· Europe's domestic Group I brightstock premium to US export prices holds at highest level since late-2022..· High premium facilitates arbitrage from US, points to demand continuing to outpace supply.· More plentiful availability of other base oils grades gives buyers the flexibility to limit any stock-build and to procure smaller volumes more frequently.· Demand for Group I and Group III base oils could get support from their supply sources mostly being outside the US, curbing the impact of any tariffs.· Increasingly competitive prices of Group I and Group III base oils relative to Group II base oils add to their attraction..· Ongoing strength of Europe Group II prices relative to other grades and other regions could point to firmer-than-expected supply-demand fundamentals.· Any signs of pick-up in industrial activity in Europe would support firmer lube consumption, boosting requirements for additional base oils supplies.· Lube demand already shows signs of steadying in some markets.· Spain’s lube consumption rises in Jan 2025 for second month from year-earlier levels..· Firmer demand at start of 2025 adds to pick-up in consumption in other markets like Poland.· Any extension of trend would magnify seasonal rise in consumption during springtime..· Turkey’s base oils demand remains focused on supplies of Russian origin.· Group I base oils shipments from Russia account for more than 60% of Turkey’s total Group I imports in Jan 2025.· Share is largest in more than a decade, contrasts with slump in share of supplies from Europe..· Dynamic reflects competitive price of base oils of Russian origin compared with supplies from Europe..· Dynamic also reflects limited outlets for supplies of Russian origin and more limited surplus availability of European origin.· Dynamic also points to prices in other markets at higher levels for any such surplus supplies of European origin..Asia base oils demand outlook: Week of 17 March.Global base oils arb outlook: Week of 17 March.Asia base oils supply outlook: Week of 17 March
