The Netherlands’ base oils output held steady at lower levels in March for a second month, contrasting with firm imports from key suppliers of Group II base oils.The dynamic left Europe’s Group II base oils supply in a narrow, lower range in March for a third month.The lower supply cushioned the impact of a seasonal slowdown in Europe’s lube consumption during the winter months and limited the size of an overhang carried into the start of the second quarter of the year.Any such surplus showed signs of being insufficient to match demand, with Europe’s Group II base oils prices rising strongly relative to feedstock prices and relative to prices in other markets in the second quarter of the year.The Netherlands’ base oils output of 78,000 tonnes in March held below the 80,000-tonnes/month level for a second straight month, government data showed.Output previously held above the 80,000-tonnes/month level and averaged more than 100,000 tonnes/month during the nine months to January.Lower output contrasted with a pick-up in imports from key producers of Group II base oils to more than 63,000 tonnes in February and in March.The volume was up from less than 50,000 tonnes in December and in January.Europe’s Group II supply, or the Netherlands’ output and imports from other regions combined, duly held in a 141,000-145,000-tonne range in March for a third straight month.Supply of around 430,000 tonnes in the first quarter still fell from more than 490,000 tonnes during the final three months of last year to the lowest level since the second quarter of last year..But the volume remained well above levels of less than 280,000 tonnes in the first quarter of 2024, when plant-maintenance work slashed regional output.Tight supply in early 2024 and a seasonal rise in demand supported a rise in Europe’s Group II base oils premium to vacuum gasoil (VGO) in the second quarter of that year.The Group II premium to VGO rose even higher so far in the second quarter of this year, even with supply at higher levels.Europe’s Group II heavy-grade base oils price-premium to US export prices also rose strongly in the second quarter of this year.The higher price differential contrasted with a slump in Europe's Group II premium to US export prices during the second quarter of 2024.The wider premium boosted the feasibility of moving more shipments from US to Europe.It also pointed to a need for such additional volumes despite Europe’s higher Group II base oils supply so far this year compared with first-half 2024.The dynamic could reflect the region’s tighter availability of Group I base oils, especially of heavier grades, and a subsequent pick-up in demand for alternative supplies such as Group II base oils..Netherlands’ Feb base oils output falls.Europe’s March Group III base oils supply rises.US’ March exports to Europe hold firm
