· US base oils demand shows signs of staying muted.· Recent strength in US domestic light-grade prices fails to trigger any significant pick-up in demand.· Muted response to recent strength of US domestic light-grade prices suggests buyers are comfortable that supply remains sufficient.· Muted response to recent strength of US domestic light-grade prices suggests price-strength is supply- rather than demand-driven.· Trend suggests that prices could face pressure once supply improves.· US domestic spot-price discount to US posted prices stays unusually wide, complicating price discovery.· Overseas demand for US light-grade base oils could face pressure following recent rise in domestic and export prices.· Discount of US light-grade export prices to CFR India prices narrows more sharply than discount of US heavy-grade prices since mid-March 2024.· Discount of US light-grade prices to CFR India prices squeezed to narrowest in more than three months.· Discount of US light-grade domestic prices to domestic Europe prices holds close to narrowest in more than five months. · Firmer US prices relative to other regions complicate arbitrage opportunities, cuts attraction of export shipments..· Any slowdown in exports would contrast with wave of base oils/lube shipments to overseas markets in recent months.· US’ March base oils exports fall year-on-year for second time in three months.· US’ March lube exports surge in March for eighth month from year-earlier levels.· US’ March lube exports exceed base oils exports for second time in three months and for second time since 2022..· Surge in US lube exports in Q1 2024 helps to curb build-up of surplus base oils/lube supplies in domestic market.· Surge in lube exports helps to cushion against impact of weaker domestic lube demand.· Surge in lube exports could reflect moves by domestic blenders to lock in margins that are likely to be higher than refiners’ margins for base oils exports..· US lube exports to Mexico and Israel surge in March 2024 to levels that far exceed those countries’ monthly lube consumption..· Size of surge in lube exports to Mexico suggests supplies may be moving into other outlets besides finished lube market.· Shipments surge even after Mexico implemented stricter import rules in Oct 2023.· Surge in shipments points more to moves by US refiners to clear surplus volumes rather than moves by US’ domestic blenders to tap overseas demand..· Chile’s April base oils imports edge down from year-earlier levels; imports rise 12% in Jan-April 2024 from year-earlier levels..· Steady-to-firm imports mirror gradual, even if uneven improvement in Chile’s economic activity in Q1 2024.· Steady imports contrast with shrinking lube consumption in other Latin American markets like Mexico and Argentina..· Europe’s demand for premium-grade base oils likely to get support from narrower-than-usual premium to Group I prices, especially for Group III base oils.· Europe’s demand for premium-grade base oils likely to get further support from structural drop in Group I base oils supply.· Europe’s demand for Group II light grades could face pressure from signs of improving availability of Group III base oils, and competitive prices for the supplies.· Europe’s demand for Group II heavy grades could get support from tighter Group I supply and more limited competition from Group III base oils.· Overseas demand for European Group I base oils could ebb in face of higher prices and tighter supply.· Trend incentivizes overseas buyers to seek more regular flows from alternative sources..Global base oils demand outlook: Week of 13 May.Asia base oils demand outlook: Week of 13 May.Global base oils arb outlook: Week of 13 May.Global base oils cargo flows: Week of 13 May
· US base oils demand shows signs of staying muted.· Recent strength in US domestic light-grade prices fails to trigger any significant pick-up in demand.· Muted response to recent strength of US domestic light-grade prices suggests buyers are comfortable that supply remains sufficient.· Muted response to recent strength of US domestic light-grade prices suggests price-strength is supply- rather than demand-driven.· Trend suggests that prices could face pressure once supply improves.· US domestic spot-price discount to US posted prices stays unusually wide, complicating price discovery.· Overseas demand for US light-grade base oils could face pressure following recent rise in domestic and export prices.· Discount of US light-grade export prices to CFR India prices narrows more sharply than discount of US heavy-grade prices since mid-March 2024.· Discount of US light-grade prices to CFR India prices squeezed to narrowest in more than three months.· Discount of US light-grade domestic prices to domestic Europe prices holds close to narrowest in more than five months. · Firmer US prices relative to other regions complicate arbitrage opportunities, cuts attraction of export shipments..· Any slowdown in exports would contrast with wave of base oils/lube shipments to overseas markets in recent months.· US’ March base oils exports fall year-on-year for second time in three months.· US’ March lube exports surge in March for eighth month from year-earlier levels.· US’ March lube exports exceed base oils exports for second time in three months and for second time since 2022..· Surge in US lube exports in Q1 2024 helps to curb build-up of surplus base oils/lube supplies in domestic market.· Surge in lube exports helps to cushion against impact of weaker domestic lube demand.· Surge in lube exports could reflect moves by domestic blenders to lock in margins that are likely to be higher than refiners’ margins for base oils exports..· US lube exports to Mexico and Israel surge in March 2024 to levels that far exceed those countries’ monthly lube consumption..· Size of surge in lube exports to Mexico suggests supplies may be moving into other outlets besides finished lube market.· Shipments surge even after Mexico implemented stricter import rules in Oct 2023.· Surge in shipments points more to moves by US refiners to clear surplus volumes rather than moves by US’ domestic blenders to tap overseas demand..· Chile’s April base oils imports edge down from year-earlier levels; imports rise 12% in Jan-April 2024 from year-earlier levels..· Steady-to-firm imports mirror gradual, even if uneven improvement in Chile’s economic activity in Q1 2024.· Steady imports contrast with shrinking lube consumption in other Latin American markets like Mexico and Argentina..· Europe’s demand for premium-grade base oils likely to get support from narrower-than-usual premium to Group I prices, especially for Group III base oils.· Europe’s demand for premium-grade base oils likely to get further support from structural drop in Group I base oils supply.· Europe’s demand for Group II light grades could face pressure from signs of improving availability of Group III base oils, and competitive prices for the supplies.· Europe’s demand for Group II heavy grades could get support from tighter Group I supply and more limited competition from Group III base oils.· Overseas demand for European Group I base oils could ebb in face of higher prices and tighter supply.· Trend incentivizes overseas buyers to seek more regular flows from alternative sources..Global base oils demand outlook: Week of 13 May.Asia base oils demand outlook: Week of 13 May.Global base oils arb outlook: Week of 13 May.Global base oils cargo flows: Week of 13 May
