Americas/EMEA base oils demand outlook: Week of 22 September

·         US base oils demand likely to stay more muted.

·         Seasonal slowdown in demand in Q4 2025 incentivizes blenders to cut current stock levels.

·         Unexpectedly quiet Atlantic hurricane-season so far this year incentivizes blenders to start working down inventories that were built up to cover against supply-disruptions.

·         Demand could get support from signs that any supply-surplus remains manageable, curbing prospect of sharp price-adjustments.

·         Upcoming plant-maintenance in US and open arbitrage to markets like Europe, Middle East and India likely to cushion impact of slowing domestic demand.

·         Competitive US export prices sustain firm overseas demand in markets like India.

·         Reliance on spot market for large share of such shipments leaves US market more exposed to any short-term change in supply-demand fundamentals in those overseas markets.

·         US’ share of global exports to key markets in Africa extends fall in July 2025.

·         Market-share falls amid steady flows from Europe to Africa and rise in shipments from other sources like Egypt.

·         Contrasting trends could reflect seasonal dip in demand in markets like Africa impacting spot shipments more than term shipments.

·         Fall in US shipments to Africa in July 2025 magnifies impact of slowdown in exports to Mexico that month.

·         Extension of reliance on spot markets to clear large portion of surplus volumes increases risk of more volatile export flows in coming months.

·         Expected rise in global base oils supply in coming months could add to that volatility.

·         Dynamic increases importance of outlets like Latin America to absorb more supplies.

·         Latin America’s base oils demand could hold steady.

·         Region’s lube demand consistently exceeds base oils supply in recent months.

·         Tighter supply fails to trigger subsequent jump in demand for replenishment base oils supplies.

·         Dynamic suggests blenders are comfortable maintaining lower stocks and procuring smaller volumes more frequently.

·         Strategy of maintaining lower stocks gives blenders more flexibility amid concern about economic outlook and expectations of rise in surplus base oils supply in overseas markets.

·         Procurement of smaller volumes more frequently could complicate any moves by US suppliers to boost shipments to the region in coming months to trim any surplus in their domestic market.

·         Even so, Latin America’s reliance on US supplies to cover large share of its requirements likely to sustain steady demand for those shipments.

·         Mexico’s lube demand falls in July 2025 for eighth time in nine months.

·         Weaker demand adds to attraction of maintaining low base oils stocks.

·         Weaker demand mirrors fall in Mexico’s automobile production and sales in Aug 2025, combined with ongoing drop in industrial production. 

·         Mexico’s industrial oils consumption falls in July 2025 at slowest pace in fourteen months.

·         More muted contraction could point to industrial activity starting to bottom out.

·         Any extension of improvement in industrial oils consumption would raise prospect of rise in total lube demand.

·         Europe’s base oils demand likely to stay cautious amid ready availability of most grades, downward pressure on prices and signs of mixed lube demand.

·         Dynamic incentivizes blenders to maintain lower stocks and to top up with additional volumes if required.

·         Lube consumption continues to show mixed signals.

·         France’s lube demand falls in July 2025 for third time in four months.

·         Weaker demand contrasts with firmer consumption in southern Europe.

·         Weaker demand leaves consumption in major European markets barely growing in July 2025.

·         Extension of trend through Q3 2025 would limit size of seasonal recovery in consumption in Sept 2025.

·         Europe’s base oils demand shows signs of holding firmer for premium grades than for Group I grades.

·         Europe’s total base oils exports to markets outside the region fall in July 2025 for fifth time in six months from year-earlier levels.

·         Europe’s Group I base oils exports to markets outside Europe rise in July 2025 for third time in four months.

·         Rise in Group I shipments points to even steeper drop in exports of premium-grade base oils in July 2025.

·         Dynamic points to weaker regional demand and subsequent rise in surplus availability of Group I base oils and vice-versa for premium-grade base oils.

·         Demand in Middle East could start to revive as buyers seek to replenish stocks.

·         Fall in base oils exports to Middle East in Aug 2025 follows surge in global shipments to the region in July 2025.

·         Surge in shipments in July 2025 triggers slowdown in demand as buyers consume existing stocks.

·         Fall in shipments to the region in Aug 2025 coincides with ongoing dip in typical flows from Iran.

·         Slowdown in shipments, combined with consumption of existing stocks, could trigger subsequent moves to line-up replenishment volumes.

·         Demand for replenishment volumes could see pick-up in buying interest for Group II heavy grades.

·         Healthy availability and competitive price for Group II N500 contrasts with tighter availability and higher price for Group I supplies.

·         Dynamic boosts attraction of using more of the premium-grade base oils instead of Group I supplies.

·         Global base oils exports to key markets in Africa rise in first seven months of 2025, pointing to growing requirements in those markets.

·         Rising global base oils supply, and weak demand in US and Europe, magnify importance of growth-markets like Africa.