· US base oils demand likely to stay muted.· Expectations of sufficient supplies, downward-pressure on prices and seasonal slowdown in consumption at year-end incentivize buyers to trim stocks.· Outright demand likely to stay weak even as recent fire at major blending plant triggers shift in consumption to other blenders, boosting their base oils requirements.· US Group II light-grade posted-price premium to vacuum gasoil (VGO) rises to four-month high in H1 Sept 2025..· US Group II light-grade spot-price premium to VGO rises to highest since H1 Aug 2025.· Outperformance of posted prices relative to spot prices and relative to VGO coincides with signs of weaker supply-demand fundamentals.· Dynamic could add to buyers’ preference to hold back to limit exposure to any price adjustments. .· Prospect of muted domestic demand increases importance of rise in demand from overseas markets to absorb more US supplies.· Competitive US prices increase feasibility of rise in demand from overseas markets like India..· Even with feasible arbitrage to markets like India, revival in Mexico’s demand is crucial.· US base oils/lube exports to Mexico slump in July 2025 to lowest in more than two years. .· Slump in exports cuts Mexico’s share of US exports to 32% of the total..· Share is lowest since April 2023.· Slump in exports highlights importance of Mexico as key outlet for US shipments, even with recovery in exports to other markets.· Slump in exports to Mexico coincides with weaker US Group II light-grade prices relative to markets like Europe and India during Q3 2025..· Weaker US prices relative to CFR India prices especially contrast with protracted period of US price-strength and scant surplus supply of light grades.· Even with any pick-up in shipments, any signs of protracted slowdown in exports to Mexico, and lack of any like-for-like alternative outlet, could speed up pressure on US refiners to adjust production.· Rapid recovery in exports to Mexico would by contrast ease that pressure..· Latin America’s base oils demand could stay muted even as slowdown in US base oils exports to Brazil and Argentina extends into start of Q3 2025..· Slowdown in shipments likely cut inventories in those markets during Q3 2025.· US shipments to Brazil and Argentina show signs of rebounding in Aug 2025, with wave of cargoes arriving in Sept 2025.· Shipments would help to replenish low inventories, curbing urgency to lock in additional supplies.· Buyers' expectations of growing availability of surplus supplies in overseas markets like US in coming weeks, and subsequent pressure on prices, add to attraction of maintaining lower stocks.· US combined exports to Peru and Colombia rise to three-year high in July 2025.· Rise in shipments likely to leave those markets well supplied through Q3 2025..· Europe base oils demand could ease amid signs of healthy availability of supply and downward price pressure.· Regional base oils prices fall in recent weeks even with seasonal pick-up in lube consumption in month of September.· Prices fall even as signs of recovery in lube demand at start of Q3 2025 extend to markets like Spain and Portugal..· Extension of that trend through rest of Q3 2025 would magnify seasonal rise in demand in month of September.· Base oils prices fall despite any such strength, pointing to plentiful supply to cover requirements..· Demand for light-grade base oils shows more mixed signals.· Group II and Group III base oils price-premium to Group I SN 150 widens further in H1 Sept 2025..· Europe Group II light-grade price-premium to US prices rises more quickly in recent weeks and remains high vs FOB Asia price..· Widening Group II light-grade premium to VGO, to Group I SN 150 and to US prices points to increasingly firmer supply-demand fundamentals for the premium-grade supplies.· Higher Group II price-premium boosts incentive to use more Group I base oils.· Europe Group I SN 150 export price-discount to domestic price instead stays close to widest level in more than a year..· SN 150 discount also says wider than SN 500 and brightstock domestic-export price differentials.· Wider price-discount and falling price-differential vs markets like Middle East point to weaker supply-demand fundamentals for Group I light grades..US’ July base oils exports fall.Asia base oils demand outlook: Week of 15 September.Base Oil News stories and analysis also available on ICIS platform
