· US base oils demand likely to remain more muted as concern about strength of end-user consumption and expectations of improving supply incentivize buyers to maintain low stocks.· Demand could get support from procurement of additional stocks as buffer against any weather-related supply disruptions during Atlantic hurricane season.· Any such stock-building would be despite expectations of more readily-available supply over coming months.· Buyers would also face difficulty of managing price-exposure of those stocks.· Demand for domestic Group II heavy grades could get support from increasingly competitive price relative to Group I base oils.· US domestic Group II N600 price slips to discount to Group I SN 500 in May 2025 for first time since 2021..· Competitive price and signs of surplus availability boost attraction of using more Group II supplies if formulations allow.· Domestic Group II heavy-grade price moves to widest discount to Europe domestic prices since late-2021..· Widening US domestic price-discount makes even more attractive the arbitrage to move more heavy-grade supplies to Europe..· Cargo moves from US to West Africa around mid-April 2025, coinciding with plant maintenance and seasonal pick-up in demand in US market.· Availability of supply to put together cargo to move to West Africa suggests domestic demand remained muted even at that time.· Latin America’s base oils demand could be weaker than usual for the time of year as slowing lube consumption in its largest markets leaves stocks lasting longer and boosts attraction of holding smaller inventories.· Expectations of improving availability of supply in US and Asia in coming weeks could add to attraction of holding back for now.· Signs of firm economic activity in some Latin American markets could conversely support steadier lube consumption and buying interest.· Chile’s base oils/lube imports rise sharply in April 2025, leaving its three-month average import-volume rising for the first time in three months from year-earlier levels..· Higher imports coincide with firm economic activity in Chile at least in Q1 2025..· Argentina’s lube demand falls in April 2025 for second month even amid signs of economic recovery extending into Q2 2025..· Weaker domestic lube consumption contrasts with ongoing overseas demand for Argentina’s Group I base oils.· Rise in overseas demand triggers unusual and sustained surge in Argentina’s base oils exports..· Large cargo loads from Argentina in April 2025 before heading to northwest Europe, with expected arrival around end-May 2025.· Cargo follows shipment to Nigeria in March 2025, highlights Europe’s elevated Group I base oils prices relative to other markets..· Europe’s base oils demand could be more mixed as buyers seek sufficient supplies to cover requirements while keeping stocks low.· Tight availability of certain base oils grades and seasonal slowdown in demand during summer holidays add to challenge of maintaining sufficient volumes while avoiding a supply-build.· Europe’s lube demand likely to peak for the year in Q2 2025 before a seasonal slowdown in Q3 2025..· Seasonal slowdown in demand and expected completion of most regional plant maintenance work by start of Q3 2025 would give buyers more leverage to procure smaller volumes on a need-to basis. · Demand for premium-grade base oils could get support from persistently tighter availability of Group I base oils and more readily-available supplies of Group II and Group III base oils..· Demand in Middle East could hold firmer as buyers seek to replenish lower stocks.· Global base oils exports to the region stay lower than usual in March 2025 for third time in four months.· Slowdown leaves total exports to Middle East down more than 34% in first three months of 2025 vs Q1 2024 and Q1 2023..· Slowdown likely extends into Q2 2025, with shipments from Asia to Middle East staying lower than usual in April 2025..· Lower exports to Middle East, and plant maintenance in the region in Q2 2025, leave blenders with lower inventories, especially vs year-earlier levels.· Buyers’ lower stocks boost attraction for refiners in markets like Asia to target Middle East with more supplies amid likely rise in their surplus volumes in coming months. .Global exports to Middle East stay lower in April.Argentina’s April base oils/lube demand mixed.Asia base oils demand outlook: Week of 26 May.Global base oils margins outlook: Week of 26 May.Global base oils arb outlook: Week of 26 May
