· US base oils demand likely to stay weak as buyers focus on cutting stocks.· Ongoing fall in prices and signs of healthy availability of supply add to incentive to hold back.· Any sign that supply-demand fundamentals are more balanced than usual for the time of year could support demand from buyers that were concerned about market impact of growing surplus supplies.· Steady flow of US base oils exports in recent months boost prospect of limiting supply-build.· Widening US export price discount to prices in markets like India and Europe raises feasibility of extending that trend.· Signs of sharp rise in base oils imports in Nov 2024 could conversely unwind impact of high export volumes and add to concerns about growing surplus, deterring buyers. · Such a scenario already materialises in Sept 2024, cutting net exports to lowest level since H1 2023..· Latin America’s base oils demand could get support from signs of relatively balanced supplies heading into Q4 2024.· Latin America’s lube demand falls in Sept 2024 for second month from year earlier but at slower pace than previous month..· Fall in lube demand lags size of drop in region’s base oils supply in Sept 2024, triggering rise in shortfall to widest level in eleven months..· Lack of any supply-build in Q3 2024 could cushion impact of likely slowdown in regional demand in Q4 2024.· Any signs of more balanced supply-demand fundamentals in Latin America in Q4 2024 could trigger more rapid recovery in demand for replenishment supplies to meet pick-up in consumption in Q1 2025.· Any demand for overseas supplies likely to focus on shipments from US amid less attractive arbitrage from other markets, especially compared with Q3 2024.· Peru’s base oils imports in Sept 2024 include surge in supplies from South Korea..· Supplies from South Korea exceed import volume from US for first time in almost two years.· That scenario unlikely to repeat itself any time soon..· Chile’s monthly and 3-month-average base oils imports simultaneously rise in Oct 2024 for first time in four months from year-earlier levels..· Fall in Chile’s monthly or 3-month-average shipments in previous three months coincided with slowdown in country’s economic activity in Aug-Sept 2024.· Any signs of firmer demand extending to other key markets in Latin America would ease concerns about size/impact of seasonal dip in consumption in Q4 2024..· Europe’s base oils demand faces ongoing seasonal slowdown irrespective of supply and price levels.· Seasonal slowdown incentivizes refiners to adjust output or to adjust prices in order to clear surplus volumes through export markets.· Signs of healthy availability of all base oils grades give buyers the leverage to maintain low stocks and to top up with small volumes as and when required.· Europe’s Group II base oils prices maintain wide premium relative to US market..· Wide premium points to firm supply-demand fundamentals, boosting incentive to move more supplies to the region.· Wide premium contrasts with signs of weaker demand fundamentals, raising prospect of build-up of surplus volumes..· Europe’s Group III price differential by contrast weakens vs US and Asia prices in recent weeks..· Weaker Group III differential points to weaker supply-demand fundamentals vs US and Asia, starts to increase attraction for overseas refiners to move more supplies to those other markets..· Lube demand in some of Europe’s largest markets turns more mixed in Sept 2024..· Pace of region's fall in demand slows amid smaller contraction in France and Italy and rising consumption in Spain.· Smaller demand contraction and blenders’ low stocks likely increased their feedstock requirements at end-Q3 2024.· Expectations that demand growth will stay muted, combined with seasonal slowdown at year-end and healthy availability of supply, incentivize blenders to maintain low stocks.· Blenders’ low stocks could curb need before year-end to make large inventory drawdowns.· More muted moves to trim stocks, and more frequent moves to top up low stocks, could limit extent of slowdown in base oils demand at year-end and early next year.· Any further signs of improvement in lube demand could add to stock-replenishment moves early next year..US September base oil/lube exports fall.US’ September base oils imports surge.Latin America Sept lube demand falls.Europe’s Sept lube demand mixed.Asia base oils demand outlook: Week of 18 Nov.Global base oils cargo flows: Week of 18 Nov
