Europe’s March Group I Base Oils Supply Rises To Seven-Month High

• Europe's Group I base oils supply rose to a seven-month high in March, supported by higher output in Spain, UK and Turkey

• Net Group I supply retained within Europe climbed to a seven-month high despite a rise in exports to overseas markets

• Firm Group I, Group II and Group III availability pointed to Europe entering the disruption period with stronger supply buffers than initially expected

Europe's Group I base oils supply rose to a seven-month high in March, adding to signs that the region entered the supply-disruption period with elevated availability across all major base oil grades.

Total Group I supply rose to more than 190,000 tonnes in March from just over 160,000 tonnes in February, MET, Department for Business, Energy and Industrial Strategy, Secretary of State for Energy, Eurostat and other government data showed.

The volume was also well above the 2025 monthly average of less than 170,000 tonnes.

Output recovered in several key producing countries, with Spain and the UK reaching three-month highs and Turkey climbing to a nine-month high.

Exports outside Europe also increased, but net supply retained within the region still rose to a seven-month high.

Key Highlights

·         Europe's Group I exports to markets outside the region rose above 60,000 tonnes, the highest in three months, led by higher shipments from the UK.

·         Net Group I supply available within Europe exceeded 130,000 tonnes, the highest in seven months.

·         First-quarter net supply rose above 330,000 tonnes, the highest for the period since 2022.

·         Europe's Group II supply also remained elevated in March, while Group III availability showed signs of holding firmer than usual for a second straight month.

Market Repercussions

Europe entered the disruption period with elevated supplies of Group I, Group II and Group III base oils. Availability would likely have been more than sufficient to cover seasonal requirements in a typical year.

Concerns about supply disruptions, tighter Group III availability and rapidly rising prices instead encouraged buyers to bring forward procurement, tightening upstream availability while increasing inventories further down the supply chain.

Group III remained the grade most exposed to tighter supply in the coming months. Availability of other grades was also expected to tighten as refiners prioritised diesel production, reflecting similar concerns in the US and Asia.

Base oils run rates instead rose in April in other global markets including South Korea and India.

Europe's stronger starting supply position meant the market was better placed to absorb the rise in March demand even as regional prices surged.

Except for Group III, underlying availability showed signs of being firmer than procurement activity implied, especially with seasonal demand set to slow during the summer months.