· US base oils demand likely to hold steady amid expectations of sufficient supplies.· Signs of more balanced supply-demand fundamentals for now could ease any immediate concern about price correction, supporting steadier demand.· Firm margins, completion of recent plant maintenance work and more limited arbitrage opportunities could trigger pick-up in availability of supplies.· Sufficient supplies give buyers option of holding lower stocks.· Concern about weather-related supply disruptions over coming months could prompt moves to increase those stock levels.· Demand for US base oils in overseas markets like India likely to stay more muted amid less workable arbitrage, as well as access to alternative supply sources.· Demand for US base oils in Europe could get support from tighter supply and rising prices of Group I base oils, boosting the attraction of procuring Group II supplies instead.· Less competitive US Group II prices could curb any such trend..· Latin America’s lube demand likely to rise in Q3 2024 from Q2 2024, before seasonal slowdown in Q4 2024..· Firmer lube demand likely to support steady requirements for US base oils supplies.· Requirements for US supplies in Q3 2024 likely to be lower than during same time last year because of higher regional base oils supply.· Lower requirements than last year could have less impact on US refiners if US supply-demand fundamentals stay balanced-to-tight.· Any extension of balanced-to-tight US supply-demand fundamentals into Q3 2024 could also have more limited impact on Latin American market because of its more limited requirements..· Argentina’s April lube demand falls by more than 20% year-on-year for fourth month.· Speed of fall in demand incentivizes country’s blenders to minimize lubricants and base oils inventories.· Surplus of lube production over lube sales duly falls in first four months of 2024 to lowest for that period since 2020, when an economic slump similarly incentivized blenders to cut stocks..· Concern about extended fall in demand likely to boost attraction for blenders and base oils distributors to procure and hold smaller volumes.· Trend could dampen attraction of imports of base oils shipments which tend to be larger, with extended period of time between loading and delivery of the supplies..· Europe’s tighter Group I base oils supply shrinks buffer to cover any unexpected production issues, raising prospect of rise in volatility of supply and prices.· Increasingly limited surplus Group I supply in Europe, and concern about supply/price volatility, could add to incentive for blenders to maximise consumption of other grades instead.· Europe’s domestic Group I brightstock price widens its premium to SN 500 to four-month high, cuts its discount to brightstock export prices to narrowest in more than two months..· Higher price points to firmer supply-demand fundamentals for the heavy-grade product in Europe’s domestic market.· Europe’s Group II light/heavy-grade premium to Group I base oils stays close to narrowest since Nov 2023.· Narrower premium adds to attraction of procuring more Group II base oils.· Competition from Group III base oils could limit room for rise in Group II light-grade prices, adding to their attraction..· Europe’s lube demand shows signs of staying muted at start of Q2 2024, sustaining incentive for blenders to maintain lower stocks of lubricants and feedstock base oils supplies.· Blenders’ lower inventories magnify impact of any unexpected tightening of base oils availability.· The impact is even larger for base oils grades that are harder to substitute with other base oils grades, such as Group I brightstock.· Lower demand and stocks, and Europe’s tighter Group I base oils supply, duly adds to risk of more supply and price volatility.· Italy’s April lube demand holds steady from year-earlier levels as pick-up in auto lube consumption counters weaker industrial oils demand..· Italy’s lube consumption growth provides useful forward indication of state of Europe’s lube demand. .Asia base oils demand outlook: Week of 3 June.Global base oils arb outlook: Week of 3 June.Global base oils margins outlook: Week of 3 June
· US base oils demand likely to hold steady amid expectations of sufficient supplies.· Signs of more balanced supply-demand fundamentals for now could ease any immediate concern about price correction, supporting steadier demand.· Firm margins, completion of recent plant maintenance work and more limited arbitrage opportunities could trigger pick-up in availability of supplies.· Sufficient supplies give buyers option of holding lower stocks.· Concern about weather-related supply disruptions over coming months could prompt moves to increase those stock levels.· Demand for US base oils in overseas markets like India likely to stay more muted amid less workable arbitrage, as well as access to alternative supply sources.· Demand for US base oils in Europe could get support from tighter supply and rising prices of Group I base oils, boosting the attraction of procuring Group II supplies instead.· Less competitive US Group II prices could curb any such trend..· Latin America’s lube demand likely to rise in Q3 2024 from Q2 2024, before seasonal slowdown in Q4 2024..· Firmer lube demand likely to support steady requirements for US base oils supplies.· Requirements for US supplies in Q3 2024 likely to be lower than during same time last year because of higher regional base oils supply.· Lower requirements than last year could have less impact on US refiners if US supply-demand fundamentals stay balanced-to-tight.· Any extension of balanced-to-tight US supply-demand fundamentals into Q3 2024 could also have more limited impact on Latin American market because of its more limited requirements..· Argentina’s April lube demand falls by more than 20% year-on-year for fourth month.· Speed of fall in demand incentivizes country’s blenders to minimize lubricants and base oils inventories.· Surplus of lube production over lube sales duly falls in first four months of 2024 to lowest for that period since 2020, when an economic slump similarly incentivized blenders to cut stocks..· Concern about extended fall in demand likely to boost attraction for blenders and base oils distributors to procure and hold smaller volumes.· Trend could dampen attraction of imports of base oils shipments which tend to be larger, with extended period of time between loading and delivery of the supplies..· Europe’s tighter Group I base oils supply shrinks buffer to cover any unexpected production issues, raising prospect of rise in volatility of supply and prices.· Increasingly limited surplus Group I supply in Europe, and concern about supply/price volatility, could add to incentive for blenders to maximise consumption of other grades instead.· Europe’s domestic Group I brightstock price widens its premium to SN 500 to four-month high, cuts its discount to brightstock export prices to narrowest in more than two months..· Higher price points to firmer supply-demand fundamentals for the heavy-grade product in Europe’s domestic market.· Europe’s Group II light/heavy-grade premium to Group I base oils stays close to narrowest since Nov 2023.· Narrower premium adds to attraction of procuring more Group II base oils.· Competition from Group III base oils could limit room for rise in Group II light-grade prices, adding to their attraction..· Europe’s lube demand shows signs of staying muted at start of Q2 2024, sustaining incentive for blenders to maintain lower stocks of lubricants and feedstock base oils supplies.· Blenders’ lower inventories magnify impact of any unexpected tightening of base oils availability.· The impact is even larger for base oils grades that are harder to substitute with other base oils grades, such as Group I brightstock.· Lower demand and stocks, and Europe’s tighter Group I base oils supply, duly adds to risk of more supply and price volatility.· Italy’s April lube demand holds steady from year-earlier levels as pick-up in auto lube consumption counters weaker industrial oils demand..· Italy’s lube consumption growth provides useful forward indication of state of Europe’s lube demand. .Asia base oils demand outlook: Week of 3 June.Global base oils arb outlook: Week of 3 June.Global base oils margins outlook: Week of 3 June
