· US/Europe blenders’ strategy of keeping lower stocks based on expectation of sufficient supply and on uncertain demand outlook.· Demand likely to revive more strongly the longer blenders hold off replenishing stocks.· US gasoline demand rises at end-July for nineteenth straight week..· US refiners’ moves to raise base oil posted prices could prompt blenders to bring forward procurement plans to lock in supplies before new prices take effect.· US refiners’ moves to raise posted prices point to new market price-trajectory amid rising feedstock costs and increasingly firm diesel prices.· US’ May domestic and overseas demand combined rises to eleven-month high..· Trend reflects improvement in domestic demand after posted-price cuts in April and strong overseas demand in outlets like Latin America and Africa.· Overseas demand in those markets likely to hold firm over coming months, raising prospect of extension of that trend if US prices stay at competitive levels..· US base oils/lube demand outpaces supply in May for fourth time in five months..· Trend reflects importance of keeping open the arbitrage to overseas markets, especially as domestic production rises following completion of plant maintenance work..· Argentina’s June lube demand rises for first time in five months, adding to signs of stronger-than-expected consumption in Latin America..· Brazil’s June base oils imports rebound to eight-month high, adding to signs of firm regional demand in Latin America..· Brazil’s base oils demand likely to get sustained support from balanced-to-low stocks, firm domestic lube demand and upcoming plant maintenance.· Reviving lube consumption in Latin America’s largest markets likely to cushion seasonal slowdown in Q3 2023, support steady demand for supplies from US especially.· Latin America’s firm demand for supplies from US contrasts with weaker demand this time last year, when US prices were less competitive than prices in other regions like Mideast Gulf and Asia.· Latin America’s demand for supplies from US likely to stay firm so long as US prices remain more competitive than prices in those other regions..· Netherlands’ May base oils demand outpaces supply for first time in three months.· Lower supply, and stronger demand vs supply, cuts surplus during Q2 2023..· Size of supply surplus likely impacts refiners’ leverage to adjust prices in Q3 2023, when demand faces seasonal slowdown..· Europe’s Group II base oils supply shows signs of staying high through Q2 2023, boosted by wave of shipments from US..· Any sustained wave of shipments from US to Europe would muffle impact of any adjustment in the Netherlands’ supply.· Any slowdown in shipments from US to Europe would have opposite effect.· US shipments to Europe show signs of slowing in June and July..· South Africa’s June base oils imports rise to highest in seven years, reflecting country’s total reliance on imports to cover its base oils requirements.· South Africa’s total reliance on imports to cover base oils requirements for more than a year provides valuable opportunity for global base oils suppliers.· Surge in South Africa’s base oils imports from Saudi Arabia in Q2 2023 reflects country’s rising requirements and change in trade flows..· Surge in South Africa’s imports from Saudi Arabia highlights the Mideast Gulf country’s logistically advantageous location to tap east/south African markets. · Rise in South Africa’s imports add to demand for Group I base oils from Europe, where surplus supply is tighter..Global base oils - week of Aug 7: Price outlook - margins
· US/Europe blenders’ strategy of keeping lower stocks based on expectation of sufficient supply and on uncertain demand outlook.· Demand likely to revive more strongly the longer blenders hold off replenishing stocks.· US gasoline demand rises at end-July for nineteenth straight week..· US refiners’ moves to raise base oil posted prices could prompt blenders to bring forward procurement plans to lock in supplies before new prices take effect.· US refiners’ moves to raise posted prices point to new market price-trajectory amid rising feedstock costs and increasingly firm diesel prices.· US’ May domestic and overseas demand combined rises to eleven-month high..· Trend reflects improvement in domestic demand after posted-price cuts in April and strong overseas demand in outlets like Latin America and Africa.· Overseas demand in those markets likely to hold firm over coming months, raising prospect of extension of that trend if US prices stay at competitive levels..· US base oils/lube demand outpaces supply in May for fourth time in five months..· Trend reflects importance of keeping open the arbitrage to overseas markets, especially as domestic production rises following completion of plant maintenance work..· Argentina’s June lube demand rises for first time in five months, adding to signs of stronger-than-expected consumption in Latin America..· Brazil’s June base oils imports rebound to eight-month high, adding to signs of firm regional demand in Latin America..· Brazil’s base oils demand likely to get sustained support from balanced-to-low stocks, firm domestic lube demand and upcoming plant maintenance.· Reviving lube consumption in Latin America’s largest markets likely to cushion seasonal slowdown in Q3 2023, support steady demand for supplies from US especially.· Latin America’s firm demand for supplies from US contrasts with weaker demand this time last year, when US prices were less competitive than prices in other regions like Mideast Gulf and Asia.· Latin America’s demand for supplies from US likely to stay firm so long as US prices remain more competitive than prices in those other regions..· Netherlands’ May base oils demand outpaces supply for first time in three months.· Lower supply, and stronger demand vs supply, cuts surplus during Q2 2023..· Size of supply surplus likely impacts refiners’ leverage to adjust prices in Q3 2023, when demand faces seasonal slowdown..· Europe’s Group II base oils supply shows signs of staying high through Q2 2023, boosted by wave of shipments from US..· Any sustained wave of shipments from US to Europe would muffle impact of any adjustment in the Netherlands’ supply.· Any slowdown in shipments from US to Europe would have opposite effect.· US shipments to Europe show signs of slowing in June and July..· South Africa’s June base oils imports rise to highest in seven years, reflecting country’s total reliance on imports to cover its base oils requirements.· South Africa’s total reliance on imports to cover base oils requirements for more than a year provides valuable opportunity for global base oils suppliers.· Surge in South Africa’s base oils imports from Saudi Arabia in Q2 2023 reflects country’s rising requirements and change in trade flows..· Surge in South Africa’s imports from Saudi Arabia highlights the Mideast Gulf country’s logistically advantageous location to tap east/south African markets. · Rise in South Africa’s imports add to demand for Group I base oils from Europe, where surplus supply is tighter..Global base oils - week of Aug 7: Price outlook - margins