· US domestic base oils demand shows signs of easing, compounding impact of pick-up in supply.· Discount of US Group II export prices to domestic prices widens further, reflecting that dynamic..· Weaker domestic demand suggests buyers are now comfortable with existing stock levels to cover requirements over coming weeks and to cover any unexpected disruptions to supply.· Weaker base oils export prices relative to domestic prices facilitate removal of subsequent pick-up in surplus volumes.· US export prices also weaken relative to prices in overseas markets.· Increasingly competitive US prices compared with prices in overseas markets like Europe could trigger pick-up in demand in those markets..· Overseas demand for US supplies could get further boost from competitive prices compared with alternative supplies like Group I base oils in markets like Europe..· Removal of surplus supplies and avoidance of large stock-build in US could help to support steadier domestic prices, and in turn steadier domestic demand. .· Latin America’s base oils demand could see sharper slowdown if drop in consumption in Brazil extends to other markets.· Brazil’s lube demand falls for fourth straight month in June 2025 from year-earlier levels..· Sustained dip in lube demand slows blenders’ consumption of base oils feedstock supplies, curbing urgency to replenish stocks.· Weaker demand adds to attraction of covering larger share of requirements with smaller volumes from domestic sources.· Any such scenario could compound slowdown in demand for base oils supplies from overseas markets.· Any such slowdown in demand would have larger impact on supplies from US, whose shipments to Brazil were unusually high in Q2 2025..· Any such slowdown in demand would increase need for pick-up in US supplies to other outlets in Latin America or in more distant markets..· Europe’s base oils demand likely to be more muted amid seasonal slowdown in consumption in coming weeks.· Expectations of healthy availability of supply give blenders more leverage to maintain lower stocks.· Buyers would still need sufficient supplies to cover for likely rebound in lube consumption in month of September from August.· Pick-up in demand in month of September could be similar to year-earlier levels amid signs of steadier lube consumption, even if at lower levels than in recent years.· France’s lube consumption rises in May 2025 for second time in three months on jump in industrial oils consumption..· France’s rising demand contrasts with weaker consumption in key Mediterranean markets.· Mixed consumption trends leave total demand in key markets in Europe relatively steady in May 2025 vs year-earlier levels..· Any further signs of regional demand holding steadier rather than falling could boost blenders’ incentive to hold larger inventories..· Europe demand for Group I heavy neutrals could get boost from improving availability, curbing need to procure Group II supplies as a substitute.· Discount of Group I heavy-neutrals to Group II heavy grades stays unusually wide, adding to incentive to consume more Group I supplies..· Frequent variation in price-differentials and availability of supplies of different grades highlights benefit for buyers of having flexibility to switch between grades.· Overseas demand for Europe’s Group I base oils supplies could rise in anticipation of pick-up in surplus volumes.· Europe’s Group I export prices remain at levels that complicate arbitrage to markets like Middle East, curbing any such pick-up in demand..Global base oils margins outlook: Week of 28 July.Global base oils arb outlook: Week of 28 July.Asia base oils demand outlook: Week of 28 July.Base Oil News stories and analyses also available on the ICIS platform
