The UK’s base oils output fell in April from the previous month, curbing its ability to cushion the impact of lower-than-usual Group I base oils supply from other key sources in Europe.The UK’s base oils exports to markets outside Europe also surged in April, compounding the squeeze on the region’s Group I base oils supply.Europe’s Group I base oils margins rose in April and in the second quarter of the year, reflecting the region’s tighter supply-demand fundamentals.That tightness should start to reverse over the coming weeks as supply improves and demand slows.The UK’s base oils output of 31,000 tonnes in April fell from a six-month high of more than 43,600 tonnes in March, government data showed.Higher output in March cushioned the impact of a pause in base oils production in Italy that month.Lower output in April provided less support, while Italy’s base oils production remained at its second-lowest in more than seven years.Spain’s Group I base oils output also unexpectedly fell to a five-month low in April after the country suffered a major electricity outage at the end of that month. The outage forced the temporary shutdown of the country’s refineries.Lower production from Europe’s key Group I refiners cut the region’s total Group I base oils supply to around 140,000 tonnes in April..The volume fell from more than 161,000 tonnes the previous month to the lowest since November 2023.The low volume at end-2023 preceded a seasonal slowdown in demand.The low volume in April coincided with a seasonal rise in demand, magnifying its impact.The rebound in the UK’s base oils exports to markets outside Europe in April compounded the supply squeeze.Europe’s base oils supply, less the region’s exports to markets outside the region, came to around 80,000 tonnes in April.The volume was down from more than 120,000 tonnes in March and by more than 45% from more than 150,000 tonnes in April 2024.The contraction also contrasted with a rise in Europe’s Group I supply in the month of April from March in four of the previous five years.The higher supply during those years helped to cover a seasonal pick-up in demand at the start of the second quarter.The lower supply this year complicated such moves and incentivized buyers to turn to other base oils grades instead to cover requirements.Any such additional buying interest added to a seasonal pick-up in demand for premium-grade base oils.Europe’s Group II and Group III base oils margins rose even more strongly than Group I base oils in the second quarter of the year, pointing to even firmer fundamentals for those grades..Europe April Grp III base oils supply falls.Asia’s April lube demand falls
