· US interest rates are likely to stay high for an extended period, or be raised again, amid still-high inflation.· US’ April automobile sales rise at fastest pace in 22 months even in the face of high interest rates and transaction prices.· US gasoline demand rises in early May for seventh week..· Signs of firmer end-user demand could work down US blenders’ existing stocks, incentivize moves to replenish inventories.· High US base oils prices relative to crude and diesel and weak supply-demand fundamentals feed concern about more price-cuts.· The concern could incentivize blenders to procure smaller volumes and maintain lower stocks.· Brazil/Argentina/Mexico’s April automobile sales extend rise yoy, but pace of growth slows sharply..· Lube demand in Latin America enjoys seasonal boost in March – but volumes lag year-earlier levels.· Demand typically falls from March levels over following months.· Extension of year-on-year fall in consumption would magnify the slowdown.· But Latin Americas’ Q2 2023 lube demand likely to exceed Q1 consumption.· Mexico’s demand for light-grade supplies from US likely got support in Jan-Feb 2023 from low base oils prices relative to diesel prices.· Demand likely to be more muted in response to firmer US base oils prices relative to diesel from end Q1 2023.· Weaker demand would leave US producers targeting other markets instead to clear surplus supplies.· Pick-up in US arbitrage shipments to India point to such a trend.· Europe’s economic growth set to face more pressure if services sector growth starts to slow, as expected.· Europe’s Q2 lube demand still likely to rise vs Q1 on seasonal pick-up in consumption.· Italy’s March lube demand rises from February, falls year on year for sixth time in seven months.· Dynamic leaves blenders needing to replenish stocks more slowly and with smaller volumes than before.· Italy’s March PCMO lube demand holds firm, contrasting with weak HDEO/industrial oils consumption – extending recent trend throughout Europe of firm services activity/weak manufacturing activity..· Trend highlights Europe’s reliance on services sector to sustain economic growth.· Turkey’s demand for base oils cargoes of Russian origin could improve in Q2 after buyers secured more European supplies in Q1 2023.· Firmer European prices and tighter supply in Q2 was likely to coincide with a pick-up in Russian supplies following maintenance work and prices at steepening discounts to prices for European cargoes.· Turkey’s steadier premium-grade base oils imports in March reflect relative lack of European surplus volumes to clear compared with Group I base oils.· Nigeria could be another beneficiary of discounted supplies of Russian origin, amid signs of resumption of flows to the country.· Nigeria’s currency deprecation cancels out benefit of lower European Group I base oils prices in recent months, squeezing blenders’ margins..Global base oils - week of May 15: Price outlook - arbitrage.Contact us for more information about the data for this story
· US interest rates are likely to stay high for an extended period, or be raised again, amid still-high inflation.· US’ April automobile sales rise at fastest pace in 22 months even in the face of high interest rates and transaction prices.· US gasoline demand rises in early May for seventh week..· Signs of firmer end-user demand could work down US blenders’ existing stocks, incentivize moves to replenish inventories.· High US base oils prices relative to crude and diesel and weak supply-demand fundamentals feed concern about more price-cuts.· The concern could incentivize blenders to procure smaller volumes and maintain lower stocks.· Brazil/Argentina/Mexico’s April automobile sales extend rise yoy, but pace of growth slows sharply..· Lube demand in Latin America enjoys seasonal boost in March – but volumes lag year-earlier levels.· Demand typically falls from March levels over following months.· Extension of year-on-year fall in consumption would magnify the slowdown.· But Latin Americas’ Q2 2023 lube demand likely to exceed Q1 consumption.· Mexico’s demand for light-grade supplies from US likely got support in Jan-Feb 2023 from low base oils prices relative to diesel prices.· Demand likely to be more muted in response to firmer US base oils prices relative to diesel from end Q1 2023.· Weaker demand would leave US producers targeting other markets instead to clear surplus supplies.· Pick-up in US arbitrage shipments to India point to such a trend.· Europe’s economic growth set to face more pressure if services sector growth starts to slow, as expected.· Europe’s Q2 lube demand still likely to rise vs Q1 on seasonal pick-up in consumption.· Italy’s March lube demand rises from February, falls year on year for sixth time in seven months.· Dynamic leaves blenders needing to replenish stocks more slowly and with smaller volumes than before.· Italy’s March PCMO lube demand holds firm, contrasting with weak HDEO/industrial oils consumption – extending recent trend throughout Europe of firm services activity/weak manufacturing activity..· Trend highlights Europe’s reliance on services sector to sustain economic growth.· Turkey’s demand for base oils cargoes of Russian origin could improve in Q2 after buyers secured more European supplies in Q1 2023.· Firmer European prices and tighter supply in Q2 was likely to coincide with a pick-up in Russian supplies following maintenance work and prices at steepening discounts to prices for European cargoes.· Turkey’s steadier premium-grade base oils imports in March reflect relative lack of European surplus volumes to clear compared with Group I base oils.· Nigeria could be another beneficiary of discounted supplies of Russian origin, amid signs of resumption of flows to the country.· Nigeria’s currency deprecation cancels out benefit of lower European Group I base oils prices in recent months, squeezing blenders’ margins..Global base oils - week of May 15: Price outlook - arbitrage.Contact us for more information about the data for this story
