Europe Feb Grp III base oil supply stays low

Europe’s Group III base oils supply stayed lower than usual in February for a second month mostly because of a slowdown in shipments from the Mideast Gulf.

A pick-up in supplies from Spain and from Asia cushioned the slowdown.

Europe’s Group III base oils prices stayed weak during the first quarter of the year even with the lower supplies.

But the slide in the Group III base oil price premium to Group I and Group II prices paused. It had fallen sharply during the previous nine months.

Europe’s total Group III base oils supply of around 115,000 tonnes in February rose from a three-year low of less than 100,000 tonnes the previous month, government and port data showed.

Supply fell by 15% in February and for the third time in four months from year-earlier levels mostly because of a dip in flows from the Mideast Gulf since late last year.

Europe’s imports from Group III producers in the Mideast Gulf fell by more than 30% in the four months to February compared with year-earlier levels.

US base oils imports from the same producers also fell during the same period.

But the 6% contraction was small relative to the slide in flows bound for Europe.

The larger slowdown in shipments to Europe coincided with the region's increasingly wide Group III price discount to US Group III prices.

The discount flipped back to a premium in April following a recent slump in US Group III base oil prices.

The firmer Europe prices relative to the US could in turn incentivize more supplies from the Mideast Gulf to move to Europe instead over the coming months.

Any such trend would coincide with a likely pick-up in the region’s Group III base oils demand at least during the second quarter of the year.