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Supply rebound reverses dip to six-month low in October
Higher output and lower exports lift regional availability
Surplus pressures regional prices, but remains insufficient to trigger additional arbitrage shipments
Europe’s Group I base oils supply rebounded in November, recovering from an October slump and leaving the regional market well-supplied heading into the final weeks of 2025.
Total Group I supply rose to more than 165,000 tonnes in November, up from a six-month low of less than 135,000 tonnes in October, government data showed.
The combination of higher supply and a seasonal slowdown in demand raised the prospect of additional volumes carried into the start of 2026.
Key Highlights
· UK’s November base oils output rose to an eight-month high, partially offsetting a slump in Italy’s production to an eight-month low.
· Italy’s base oils output likely recovered in December following the completion of plant maintenance work that slashed production in October and November.
· Turkey’s base oils output surged to a five-month high of close to 20,000 tonnes, rebounding from a pause in output in October and far exceeding typical monthly volumes of around 9,000 tonnes in 2025.
· Europe’s Group I base oils exports to markets outside the region fell to a six-month low in November, slipping for a fourth month year on year and leaving more supply in the regional market.
· Lower exports and rising supply left a larger regional surplus that rebounded from a multi-year low in October.
Market Repercussions
The recovery in supply at year-end helped cover unexpected production issues in markets like Hungary and coincided with softer seasonal demand.
Expectations of sufficient availability and downward pressure on prices added to the incentive for buyers to hold back until the start of 2026.
Domestic Europe Group I base oils prices trended lower versus feedstock and competing fuel prices during the fourth quarter, reflecting weaker fundamentals.
But Group I prices strengthened relative to prices in overseas markets like Asia in the final weeks of last year.
The dynamic suggested that regional availability was more than sufficient, but surplus volumes remained manageable, limiting the need to line up more arbitrage cargoes to overseas markets.
