· US base oils demand likely to stay well supported until the peak Atlantic hurricane season has passed.· Another storm could form in the Atlantic over the coming week, although it is currently forecast to miss the US.· Demand faces the prospect of falling faster than usual if any supply disruptions are less severe than expected, leaving companies with larger volumes to consume or clear.· Seasonal slowdown in consumption in Q4 2024 would add to companies’ urgency to cut their inventories.· Dynamic leaves base oils companies exposed to risk that is difficult to cover against.· Firm US prices keep shut the arbitrage for spot shipments to markets like India..· Firm Europe Group I base oils prices sustain attraction of moving more US supplies to that market, with another cargo lined up to move from the US to northwest Europe this month.· Concern about US supply disruptions adds to incentivize for overseas buyers to target supplies from other sources.· Latin America’s base oils demand likely to hold firm amid signs of tighter supply-demand fundamentals in the region heading into Q3 2024.· Demand for supplies from more distant outlets like Asia could get support from prices that make the arbitrage more feasible.· Demand for those supplies could start to wane in a few weeks for shipments that are unlikely to reach the region until well into Q4 2024.· Prospect of seasonal slowdown in demand at that time would curb attraction of taking delivery of supplies that could then add to a surplus..· Europe’s Group I base oils demand shows signs of staying strong, even with steady drop in production capacity and firm base oils prices.· Firm prices curb overseas demand for European supplies.· Firm prices boost interest from suppliers in Europe such as Italy and neighbouring markets like Turkey to tap Europe’s demand.· Europe’s Group I base oils supply gets a boost from Italy in H1 2024 even after closure of Group I plant in the country.· Italy’s June base oils output stays in narrow range for seventh month even after closure of Group I plant..· Steady output contrasts with falling domestic base oils demand, freeing up more supplies for export.· Italy’s exports to outlets in Europe duly surge in first four months of 2024, while shipments to markets outside Europe fall.· Trend shows signs of extending at least through May 2024..· Trend adds to signs of growing number of regional and overseas Group I refiners targeting European market with supplies..· Turkey’s June base oils exports to Netherlands rise to highest in a year, reflecting that trend.· Turkey’s June imports from Greece pause in June 2024, as more supplies from the south European country move to northwest Europe instead..· These changing trade flows likely to continue while Europe’s demand for Group I base oils stays firm.· Demand stays firm despite tighter supply and increasingly high prices relative to other base oils grades.· Demand for Group II base oils could get support from the product’s increasingly narrow premium to Group I base oils and signs of healthy availability of supply.· Healthy availability of supply could also squeeze demand by curbing buyers’ urgency to lock in volumes..Asia base oils supply outlook: Week of 12 Aug.Global base oils demand outlook: Week of 12 Aug.Global base oils margins outlook: Week of 12 Aug.Global base oils arb outlook: Week of 12 Aug
· US base oils demand likely to stay well supported until the peak Atlantic hurricane season has passed.· Another storm could form in the Atlantic over the coming week, although it is currently forecast to miss the US.· Demand faces the prospect of falling faster than usual if any supply disruptions are less severe than expected, leaving companies with larger volumes to consume or clear.· Seasonal slowdown in consumption in Q4 2024 would add to companies’ urgency to cut their inventories.· Dynamic leaves base oils companies exposed to risk that is difficult to cover against.· Firm US prices keep shut the arbitrage for spot shipments to markets like India..· Firm Europe Group I base oils prices sustain attraction of moving more US supplies to that market, with another cargo lined up to move from the US to northwest Europe this month.· Concern about US supply disruptions adds to incentivize for overseas buyers to target supplies from other sources.· Latin America’s base oils demand likely to hold firm amid signs of tighter supply-demand fundamentals in the region heading into Q3 2024.· Demand for supplies from more distant outlets like Asia could get support from prices that make the arbitrage more feasible.· Demand for those supplies could start to wane in a few weeks for shipments that are unlikely to reach the region until well into Q4 2024.· Prospect of seasonal slowdown in demand at that time would curb attraction of taking delivery of supplies that could then add to a surplus..· Europe’s Group I base oils demand shows signs of staying strong, even with steady drop in production capacity and firm base oils prices.· Firm prices curb overseas demand for European supplies.· Firm prices boost interest from suppliers in Europe such as Italy and neighbouring markets like Turkey to tap Europe’s demand.· Europe’s Group I base oils supply gets a boost from Italy in H1 2024 even after closure of Group I plant in the country.· Italy’s June base oils output stays in narrow range for seventh month even after closure of Group I plant..· Steady output contrasts with falling domestic base oils demand, freeing up more supplies for export.· Italy’s exports to outlets in Europe duly surge in first four months of 2024, while shipments to markets outside Europe fall.· Trend shows signs of extending at least through May 2024..· Trend adds to signs of growing number of regional and overseas Group I refiners targeting European market with supplies..· Turkey’s June base oils exports to Netherlands rise to highest in a year, reflecting that trend.· Turkey’s June imports from Greece pause in June 2024, as more supplies from the south European country move to northwest Europe instead..· These changing trade flows likely to continue while Europe’s demand for Group I base oils stays firm.· Demand stays firm despite tighter supply and increasingly high prices relative to other base oils grades.· Demand for Group II base oils could get support from the product’s increasingly narrow premium to Group I base oils and signs of healthy availability of supply.· Healthy availability of supply could also squeeze demand by curbing buyers’ urgency to lock in volumes..Asia base oils supply outlook: Week of 12 Aug.Global base oils demand outlook: Week of 12 Aug.Global base oils margins outlook: Week of 12 Aug.Global base oils arb outlook: Week of 12 Aug
