Americas/EMEA base oils demand outlook: Week of 3 November

·         US base oils demand likely to weaken over coming weeks amid seasonal slowdown in requirements and expected rise in supply.

·         US Group II domestic price-premium to export prices stay in narrow range at time of year when it typically widens.

·         Steady domestic price-premium points to more balanced fundamentals, curbs pressure on any imminent adjustment in those domestic prices.

·         Steady outright prices could incentivize buyers to maintain rather than hold back from any procurement plans.

·         Even so, any such procurement plans likely to involve smaller volumes as blenders focus on trimming stock-levels.

·         Latin America’s base oils demand could be mixed.

·         Brazil’s base oils demand likely to hold steady to replenish and maintain balanced-to-low inventories.

·         Brazil’s base oils demand matches supply in Sept 2025, reflecting that dynamic.

·         Balanced-to-low stocks give blenders flexibility to benefit from availability of any pick-up in supplies at competitive price levels over coming months.

·         Balanced-to-low stocks give blenders flexibility to slow down procurement plans if finished lube demand slows.

·         Expectations of slower economic growth over coming year boosts attraction of maintaining that kind of flexibility.

·         Argentina’s base oils demand could be more muted in face of persistently weak lube consumption.

·         Argentina’s lube demand falls in Sept 2025 for fifth time in six months.

·         Shrinking demand slows blenders’ consumption of feedstock base oils supplies.

·         Shrinking demand incentivizes blenders to maintain low stocks.

·         Surplus of lube production over demand by contrast rises to multi-year high in Q3 2025.

·         Rising surplus of lubricants supplies could add to blenders’ incentive to trim output, cutting demand for feedstock supplies.

·         Argentina’s base oils demand could face additional pressure from moves to remove build-up of surplus supplies.

·         Argentina’s base oils demand lags supply in Sept 2025 by largest volume in at least two years.

·         Rise in surplus supply curbs buyers’ ability to take advantage of any rise in surplus volumes in overseas markets over coming months.

·         Rise in surplus supply instead leaves buyers exposed to risk of lower prices in coming months, cutting the value of those stocks.

·         Dynamic incentivizes buyers to clear stocks first before seeking additional volumes.

·         Demand for US supplies in other overseas markets could get support from signs of slowdown in shipments from some key suppliers in Asia in recent weeks.

·         Exports from Saudi Arabia also set to fall in coming weeks because of planned-maintenance work in the country.

·         Europe’s base oils demand likely to stay weak in face of healthy availability of supply and slack lube consumption growth.

·         Italy’s lube demand rises in Sept 2025 at slowest pace in five months.

·         Weak consumption raises prospect of Europe’s lube-demand growth remaining weak through Q4 2025.

·         Weak consumption-growth facilitates blenders’ procurement plants, gives them more flexibility to keep lower stocks.

·         Weak consumption-growth similarly facilitates base oils distributors’ supply plans.

·         Blenders’ lower stocks could also limit size of destocking at year-end.

·         Europe’s demand for Group III base oils shows signs of holding firmer.

·         Premium of Group III 4cSt (low) price over Group II N150 extends rise at end-Oct 2025 to widest level in a year.

·         Price-premium continues to widen even with pick-up in Group III supplies from Middle East.

·         Firm price-premium and rising supply raises prospect either of adjustment in price or points to stronger demand that more than balances out rise in supply.