· US base oils demand set to revive early next year as blenders replenish depleted stocks.· Signs of steadier base oils prices and manageable supply balance could ease concern about price volatility, adding to pick-up in demand.· Even so, outright demand set to stay weak during winter months, curbing volume of any replenishment supplies.· Weak outright demand sustains need to maintain high base oils export volumes to limit supply-build.· Steadier export prices relative to prices in overseas markets like Europe and India in recent weeks could point to more manageable surplus volumes, curbing urgency to line up more arbitrage shipments.· Steadier export prices could conversely slow pace of any line up of arbitrage shipments, triggering rise in surplus volumes..· Rise in US base oils/lube exports in Oct 2024 include pick-up in arbitrage shipments to markets like Africa, pointing to focus on clearing surplus supplies..· Rise in arbitrage shipments points to prices at levels that were competitive enough to lock in the deals.· Removal of surplus volumes then eases downward pressure on US prices for other buyers in domestic/overseas markets.· Rise in arbitrage shipments to Africa coincides with surge in flows to South America and Mexico to two-year high in Oct 2024..· Rise in arbitrage shipments to markets like Africa and Latin America curbs pressure on US suppliers to move shipments to other outlets like India.· Availability of alternative outlets give US suppliers more leverage over price and volume for any shipments lined up for outlets like India.· Exports to South America include jump in shipments to Argentina, Brazil and Peru..· Rise in shipments coincides with seasonal slowdown in demand in Latin America, raising prospect of pick-up in surplus supplies.· Any extension of trend through rest of Q4 2024 would leave Latin American buyers with healthy supplies to meet seasonal pick-up in demand in Q1 2025.· Trend would curb prospect of rise in demand for additional supplies in early 2025.· Any ongoing surplus US volumes at that time would face pressure to target other markets to avoid large supply-build in Latin America. .· Europe’s base oils demand likely to improve early next year as blenders look to replenish depleted stocks.· Demand could get further support if typical region-wide volume of surplus supplies is lower than usual.· Lower-than-usual volume of surplus supplies could support steadier prices, easing buyers’ concern about exposure to price volatility.· Demand for Group I brightstock could get additional support from concern about sufficient availability of supply.· Group I brightstock prices move to unusually firm levels relative to SN 500, relative to export prices and relative to VGO in recent weeks..· Recent fall in Europe Group I export base oil prices could trigger firmer demand from overseas markets.· Europe Group I export prices maintain premium to prices in markets like Middle East and India even after drop in prices..· Firm price levels relative to prices in those markets could continue to complicate flow of arbitrage shipments..· Europe Group III 4cSt (low) price premium to Group II N150 falls further to narrowest in more than three years..· Increasingly narrow Group III premium to Group II base oils and plentiful supply boost incentive for blenders to use more Group III base oils in place of Group II..Asia base oils demand outlook: Week of 16 Dec.Global base oils arb outlook: Week of 16 Dec.Global base oils margins outlook: Week of 16 Dec
· US base oils demand set to revive early next year as blenders replenish depleted stocks.· Signs of steadier base oils prices and manageable supply balance could ease concern about price volatility, adding to pick-up in demand.· Even so, outright demand set to stay weak during winter months, curbing volume of any replenishment supplies.· Weak outright demand sustains need to maintain high base oils export volumes to limit supply-build.· Steadier export prices relative to prices in overseas markets like Europe and India in recent weeks could point to more manageable surplus volumes, curbing urgency to line up more arbitrage shipments.· Steadier export prices could conversely slow pace of any line up of arbitrage shipments, triggering rise in surplus volumes..· Rise in US base oils/lube exports in Oct 2024 include pick-up in arbitrage shipments to markets like Africa, pointing to focus on clearing surplus supplies..· Rise in arbitrage shipments points to prices at levels that were competitive enough to lock in the deals.· Removal of surplus volumes then eases downward pressure on US prices for other buyers in domestic/overseas markets.· Rise in arbitrage shipments to Africa coincides with surge in flows to South America and Mexico to two-year high in Oct 2024..· Rise in arbitrage shipments to markets like Africa and Latin America curbs pressure on US suppliers to move shipments to other outlets like India.· Availability of alternative outlets give US suppliers more leverage over price and volume for any shipments lined up for outlets like India.· Exports to South America include jump in shipments to Argentina, Brazil and Peru..· Rise in shipments coincides with seasonal slowdown in demand in Latin America, raising prospect of pick-up in surplus supplies.· Any extension of trend through rest of Q4 2024 would leave Latin American buyers with healthy supplies to meet seasonal pick-up in demand in Q1 2025.· Trend would curb prospect of rise in demand for additional supplies in early 2025.· Any ongoing surplus US volumes at that time would face pressure to target other markets to avoid large supply-build in Latin America. .· Europe’s base oils demand likely to improve early next year as blenders look to replenish depleted stocks.· Demand could get further support if typical region-wide volume of surplus supplies is lower than usual.· Lower-than-usual volume of surplus supplies could support steadier prices, easing buyers’ concern about exposure to price volatility.· Demand for Group I brightstock could get additional support from concern about sufficient availability of supply.· Group I brightstock prices move to unusually firm levels relative to SN 500, relative to export prices and relative to VGO in recent weeks..· Recent fall in Europe Group I export base oil prices could trigger firmer demand from overseas markets.· Europe Group I export prices maintain premium to prices in markets like Middle East and India even after drop in prices..· Firm price levels relative to prices in those markets could continue to complicate flow of arbitrage shipments..· Europe Group III 4cSt (low) price premium to Group II N150 falls further to narrowest in more than three years..· Increasingly narrow Group III premium to Group II base oils and plentiful supply boost incentive for blenders to use more Group III base oils in place of Group II..Asia base oils demand outlook: Week of 16 Dec.Global base oils arb outlook: Week of 16 Dec.Global base oils margins outlook: Week of 16 Dec
