The Netherlands’ base oils output rose to a five-month high in December, countering a drop in Europe’s imports from markets producing Group II base oils.Europe's total supply of the premium-grade base oils duly rose in December, at a time of year when demand faced a seasonal slowdown.Firm supply and weaker demand raised the prospect of healthy availability of supplies early this year.The Netherlands’ base oils and lube output of 115,000 tonnes in December rose from 92,000 tonnes in November and more than doubled from year-earlier levels, government data showed.The rise in output extended a pattern of unusually high production levels since June 2024.The higher output followed the shutdown of a Group II base oils plant in the Netherlands earlier that year.The plant is Europe’s sole virgin Group II base oils unit.The higher output since mid-2024 coincided with firm import volumes from key sources of Group II base oils in the third quarter of the year.The import volumes then began to dip in November and December.Even with the lower volumes, total supply from the Netherlands and overseas markets combined rose to around 165,000 tonnes in December and to more than 490,000 tonnes in the fourth quarter of the year..The fourth-quarter volume was down from more than 550,000 tonnes in the three months to end-September.It still rose from around 360,000 tonnes in the fourth quarter of 2023 to the second-highest level since 2021.Firm supply coincided with a seasonal dip in Europe’s lube demand at year-end.The diverging fundamentals raised the prospect of adding to the size of any surplus volumes carried into the start of this year.A larger surplus cut requirements for additional supplies from overseas markets.Europe’s Group II base oils prices pointed to such a dynamic.The region’s Group II prices weakened steadily relative to US export prices since early November.The narrowing price premium contrasted with an unusually high premium at end-2023 and early 2024 that boosted the incentive to move more shipments to Europe.The lower premium this time instead cut the attraction of such moves.US base oils exports to Europe duly slumped in the fourth quarter of last year.Any extension of the Netherlands’ output holding at higher levels early this year would put pressure on those exports to stay at lower levels. .Europe Dec Grp III base oils supply falls.US Dec base oil exports to Europe stay low.Base Oil News stories and analyses also available on the ICIS platform
