Americas/EMEA base oils - week of Sep 18: Demand outlook

Americas/EMEA base oils - week of Sep 18: Demand outlook

·        Americas/Europe base oils demand likely to get support from higher prices, balanced-to-tighter supplies.

·        Lube demand turns more mixed in Latin America; demand in Mediterranean region shows signs of extending recovery.

·        US gasoline demand rises in early September for twenty-fourth week in twenty five.

Fuel demand holds firm
Fuel demand holds firmEIA

·        US base oils demand could get temporary boost after US refiners raise posted prices for second month running.

·        Narrowing posted-price premium to feedstock and competing fuel prices had raised prospect of such a move.

·        Blenders could seek to lock in additional supplies before the new prices come into effect.

·        Blenders will face more pressure to raise finished lube prices following second base oils price-rise.

·        Any such moves likely to be more difficult in face of softer-than-usual end-user demand.

·        US’ July Group III base oils imports fall year-on-year for third month on sustained dip in supplies from Mideast Gulf.

Imports from Mideast Gulf stay lower
Imports from Mideast Gulf stay lowerUS Census Bureau

·        Trend suggests supplies from Mideast Gulf more sensitive to prices than supplies from Asia.

·        Steady recovery in US Group III prices vs Europe prices since late-June 2023 raise prospect of more shipments moving to US.

·        US Group III imports from Asia likely dropped in August on slowdown in shipments from South Korea; imports then likely to recover in September.

·        Mexico’s lube demand falls in July for third month and to lowest in almost two years.

Demand falls again
Demand falls againINEGI

·        Any extension of that trend would curb the country’s demand for base oils supplies used for the production of finished lubricants.

·        Such a trend would have less impact on demand for very-light grade base oils unless US export prices rise further.

·        Peru continues to take delivery of steady flow of Group II heavy grades and bright stock from Asia, reflecting still-open arbitrage for those shipments.

·        US share of Peru’s base oils imports stays lower than usual, reflecting impact of the Asia supplies.

US share falls
US share fallsCustoms data

·        Rising US prices vs Asia prices could make the arbitrage even more attractive.

·        US’ July base oils exports to Brazil rise to one-year high as Latin American country builds stocks ahead of plant shutdowns in Q3-Q4 2023.

·        Brazil’s demand for overseas base oils supplies could subsequently slow down once sufficient supplies are secured.

·        Portugal’s July lube demand falls for fourth time in five months.

·        Slowdown contrasts with firmer demand in Italy, even steeper slowdown in Germany.

Europe's lube demand stays mixed
Europe's lube demand stays mixed

·        Trend points to ongoing regionwide slowdown in demand combined with more pockets of growth.

·        Firmer lube demand in Spain in July adds to those pockets of growth.

Demand rises again
Demand rises againCORES

·        South Africa’s July base oils imports correct lower from unusually high volume in June, still rise from year-earlier levels for seventh month.

Imports keep rising
Imports keep rising South African Revenue Service

·        South Africa’s total reliance on base oils imports to cover requirements boosts its attraction as key outlet for supplies from US, Europe and Mideast Gulf.

·        Europe’s tighter Group I supplies likely to boost South Africa’s requirements from the other sources.

·        Prices for Group I shipments from Europe to Turkey stay competitive in July versus supplies from Russia.

Europe prices stay competitive
Europe prices stay competitiveTurkish Statistical Institute

·        Trend contrasts with last year, sustains steady demand from Turkey for European supplies, and curbs Turkey’s demand for Russian supplies.

·        High but more limited flow of shipments from Russia to Turkey increase pressure on Russia's refiners to move more supplies to other markets.

·        Pressure to find additional outlets rises following completion of plant maintenance work in Russia in Q2 2023.

Americas/EMEA base oils - week of Sep 18: Demand outlook
Global base oils - week of Sep 18: Price outlook - arbitrage

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