Americas/EMEA base oils demand outlook: Week of 18 August

·         US base oils demand likely to stay lower as seasonally-slower consumption adds to caution about outlook.

·         Expectations of healthy availability of supply give buyers flexibility to maintain lower stocks and top up with smaller volumes more frequently.

·         Lower crude oil prices could add to downward pressure on prices that already face pressure from weaker fundamentals and lower export prices.

·         Lower prices add to attraction for buyers to hold back.

·         Discount of US Group II N100 export price to domestic price deepens in H1 Aug 2025 to widest level in more than a year.

·         Widening discount because of lower export prices raises prospect of adjustment in domestic prices.

·         Domestic N100 price duly edges lower, trimming the discount slightly.

·         Demand could get some support from moves to maintain sufficient stocks to cover against any supply-disruptions, especially as hurricane-season moves into its more active period.

·         Overseas demand for US supplies could get support from competitive US prices and signs of more ready availability compared with suppliers in other markets.

·         US Group II light-grade prices flip in H1 Aug 2025 to widest discount to CFR India prices in more than a year.

·         US Group II shipments to India this year consisted mostly of mid-viscosity and heavy-grade base oils.

·         Recent weakness of US light-grade prices could trigger pick-up in arbitrage shipments of those supplies too.

·         Latin America’s demand could be more muted.

·         Expectations of rising US supply and lower prices boost buyers’ incentive to hold back.

·         Signs of weak lube consumption and healthy supplies give buyers additional room to hold back.

·         Brazil’s base oils imports stay higher than usual in July 2025 for fourth straight month, boosted by arrival of more US shipments.

·         High imports likely keep blenders’ stocks at healthy levels, curbing any urgency to replenish inventories.

·         Europe’s base oils demand likely to be mixed.

·         Demand could get boost from moves to build sufficient stocks in preparation for seasonal pick-up in lube consumption in month of September.

·         Demand could get more support in southern Europe, where lube consumption shows signs of more widespread growth.

·         Lube consumption in Spain rises in June 2025 for first time in three months, adding to higher demand in Italy and Portugal.

·         Even in southern Europe, volatility of lube demand growth likely to incentivize blenders to continue to limit inventories.

·         Expectations of ready availability of supplies give blenders flexibility to top up with additional volumes if demand exceeds expectations.

·         Europe’s Group I base oils prices hold firm relative to prices in other markets.

·         Firm prices point to relatively firm supply-demand fundamentals, especially for heavier grades.

·         Cargo of brightstock from US reaches India in July 2025, tapping increasingly feasible arbitrage to that market.

·         US cargo moves to India rather than to Europe, even with Europe brightstock price at more competitive level than CFR India price.

·         Shipment of brightstock cargo to India rather than to Europe could suggest that regional supply in Europe is sufficient to cover demand.

·         Shipment to India rather than Europe could reflect concern about seasonal slowdown in demand in Europe during summer-holiday period. 

·         UK’s June base oils exports to Europe fall to four-month low in June 2025, while shipments to markets like Africa rise.

·         Shipments to Europe fall even during round of plant-maintenance work in the region.

·         Drop in shipments to Europe from key supplier of Group I base oils could suggest regional supply was sufficient to meet demand even before start of Q3 2025.

·         Europe’s Group II heavy-grade prices extend rise vs Group I SN 500.

·         Widening Group II price-premium and improving availability of Group I SN 500 incentivize blenders to procure more Group I heavy-neutrals.

·         Ongoing Group II price-strength suggests demand remains firm despite improving availability and more competitive price for Group I base oils.

·         Dynamic could reflect a more structural switch to using more Group II base oils.

·         Demand in Middle East for Group II heavy grades could get boost from increasingly competitive Group II prices relative to Group I base oils.

·         Tighter regional availability of Group I base oils, and more plentiful availability of Group II base oils in US and Asia, could add to attraction of using more of the premium-grade supplies.