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Higher Group II base oils supply contrasts with dip in Group I/III supply
Excluding Netherlands' refinery demand, total supply rises to ten-month high
Group II prices lag Group I and especially Group III prices at end-2025
Europe’s Group II base oils supply edged higher in October, contrasting with tighter fundamentals for Group I and Group III grades at a time of year when demand typically slows.
Total supply, or regional output and imports combined, rose to just over 150,000 tonnes in October, up from around 145,000 tonnes in September, government data showed.
Excluding the Netherlands’ refinery consumption, supply increased more sharply to a ten-month high.
Supply rose at a time of year when demand typically softens before year-end.
Europe’s Group II base oils price-premium to gasoil widened during the last two months of the year even amid higher supply and more muted demand.
But prices weakened relative to Group I and especially Group III base oils.
Key Highlights
· The Netherlands’ base oils output fell to 83,000 tonnes in October, the lowest in four months.
· The Netherlands’ base oils/lube consumption dropped to 31,000 tonnes in October, down from more than 70,000 tonnes in each of the previous three months and the lowest since March.
· Consumption had been unusually high earlier because of refinery-related factors rather than end-user demand.
· Europe’s total supply, excluding the Netherlands’ refinery consumption, rose to more than 131,000 tonnes in October, up from less than 85,000 tonnes in September and the highest since December 2024.
· Higher Group II base oils supply contrasted with a dip in Group I supply to a near-two-year-low and in Group III supply to a ten-month low.
Market Repercussions
Higher Group II supply and weaker demand raised the prospect of continued pressure on prices relative to other base oils grades early this year.
Increased availability also raised the importance of limiting additional arbitrage cargoes from other markets like US and Asia.
Such a slowdown became more feasible after the premium of Europe Group II prices over US light- and especially heavy-grade base oils narrowed sharply during the fourth quarter.
