Europe’s Group II Supply Remains Elevated in March For Third Month

Europe's Group II base oils supply held well above typical levels in March for a third straight month, providing a buffer against supply disruptions as buyers moved to secure supplies amid tighter global markets.

Group II supply, or Netherlands output and imports into Europe, came to around 170,000 tonnes in March, Eurostat, HMRC, CBS Statline and shipping data showed.

The volume edged down from more than 175,000 tonnes in January and February but remained well above average monthly levels of 151,000 tonnes in 2025.

Imports held firm as the arrival of a cargo from Taiwan partially balanced out lower shipments from the United States.

The Netherlands’ base oils output also remained elevated, with March production holding at its second-highest level in seven months.

The sustained high supply levels helped absorb the surge in Europe’s lubricants demand that began in March.

Key Highlights

·         Netherlands base oils output fell to 110,000 tonnes from a 19-month high of 119,000 tonnes in February but remained the second-highest in seven months.

·         The shipment from Taiwan was the largest in more than seven years, but departed for Europe well before the end-February supply disruptions.

·         First-quarter Group II supply exceeded 520,000 tonnes, up from around 450,000 tonnes in the fourth quarter and the highest since the third quarter of 2024.

·         US shipment arrivals showed signs of improving in April, with further recovery expected in May and June.

Market Repercussions

Europe entered the disruption period with healthy Group II availability. Firm supply and signs of improving US shipments in the second quarter pointed to the prospect of availability remaining relatively comfortable during that period.

Demand for Group II base oils rose as buyers sought to secure supplies to cover against disruption risks, and as a potential alternative feedstock in place of tighter availability of Group I and Group III grades.

The surge in Europe Group II prices since March outpaced gains in other markets such as US and Asia, pointing to tighter supply-demand fundamentals and a reliance on imports to cover more than 40% of supply.

The price-surge boosted arbitrage economics into the region and raised the prospect of additional shipments from Asia as supply there improved.

Any extension of elevated supply through the end of the second quarter could coincide with softer buying interest as high prices, larger blender inventories and the seasonal summer slowdown reduce the incentive to add stocks.