The Netherlands’ base oils output recovered to a three-month high in April, balancing out the impact of a drop in Europe's imports from key sources of Group II base oils.Steady volumes of Group II base oils in April contrasted with a fall in Europe’s Group I base oils supply to a seventeen-month low.The contrasting trends coincided with a seasonal rise in regional base oils demand.Tighter availability of Group I base oils incentivized buyers to target more Group II supplies instead.A pick-up in demand, without any sharp rise in Group II supply, raised the prospect of tighter fundamentals.Europe’s Group II base oils prices outpaced the region’s Group I prices in the second quarter of the year, pointing to such a trend.The Netherlands’ base oils output of 89,000 tonnes in April rose from less than 80,000 tonnes during each of the previous two months, government data showed.The Netherlands is home to Europe’s sole virgin Group II base oils unit.The country’s higher output contrasted with and balanced out a fall in Europe’s base oils imports from key sources of Group II base oils to a three-month low.Europe’s total Group II supply, or the Netherlands output and those regional imports combined, duly held in a 141,000-146,000 tonnes/month range in April for the fifth time in six months..The Group II volumes held steady even at a time of year when demand got a seasonal boost.Buying interest likely got additional support from the sharp fall in Europe’s Group I supply in April.The drop in volumes left combined Group I and Group II base oils supply at more than 280,000 tonnes in April, with each grade accounting for around half the total volume.The Group I share of the volume was down from more than 75% of the total during the same month a year ago.The lower supply of Group I base oils, and tighter availability of heavy grades especially, boosted the attraction for blenders to procure more Group II base oil instead.The outperformance of Europe’s Group II heavy-grade prices relative to other grades and other regions in the second quarter pointed to such a move.The premium of Europe Group II heavy-grade prices over Group I SN 500 rose through the second quarter to its highest level in more than two years.That dynamic could start to reverse in the coming weeks as Group I supply improves following the completion of plant-maintenance work.Steady availability of Group II supplies and concern about more volatile supply of Group I base oils could also incentivize some blenders to stick with the premium-grade supplies..UK’s April base oils output falls.Europe April Grp III base oils supply falls.US’ April base oils/lube exports fall
