· US base oils demand likely to stay well supported over coming month as market heads into peak-hurricane period.· Demand for base oils supplies to build stocks counters for now impact of seasonal slowdown in lube consumption.· Demand could fall more than usual from end-Q3 2024 if any supply disruptions are less severe than planned for, leaving more surplus volumes to clear.· US Group III base oils demand could get support from healthy availability and increasingly competitive price vs Group II light grades.· US Group III 4cSt premium to US domestic Group II light grades extends slide to lowest in more than seven years.· Overseas demand for US supplies from arbitrage buyers likely to remain muted, with US prices uncompetitive versus prices in other regions..· Latin America’s demand for US supplies could stay well supported for now as any additional arbitrage shipments from more distant markets like Asia would likely only reach the region in Q4 2024, when demand typically slows.· Demand for US supplies for more prompt delivery likely to hold firm as blenders and distributors seek to replenish low stocks to cushion against any disruptions to shipments from the US over the coming weeks.· Stocks could be lower after Latin America’s lube demand rises in June 2024 from year earlier for second time in three months..· Lube demand also outpaces base oils supply from regional refiners and from US in June 2024 for fourth straight month..· Shortfall curbs buyers’ opportunity to build inventories, increases the need for additional shipments from other markets..· Chile’s base oils imports rise in July 2024 from previous month, fall from year-earlier.· Chile’s 3-month average base oil/lube imports fall in July 2024 for third time in four months..· Drop in shipments coincides with marked slowdown in Chile’s economic growth at end-Q2 2024 amid dip in manufacturing production and services activity.· Slowdown in economic activity could incentivize blenders to trim their feedstock inventories..· Europe’s base oils demand faces seasonal pick-up in coming weeks as normal activity resumes after summer holidays.· Europe’s lube demand shows more widespread signs of slowing even before Q3 2024, when consumption faced a seasonal dip.· Slowing consumption incentivizes blenders to maintain lower inventories even when they replenish stocks after the summer holidays.· Europe’s firm Group I base oils prices point to persistent buying interest for the grade, despite increasingly competitive prices for premium-grade base oils.· Lack of significant reaction in Europe’s Group II prices relative to higher US prices suggests sellers could have insufficient leverage to adjust prices to reflect the higher US prices.· More limited leverage points to healthy availability of supply or fragile demand.· Europe’s Group III base oils demand could get support from moves to replenish stocks and from competitive prices relative to Group II prices.· Signs of healthy availability of supply give buyers the leverage to procure smaller volumes more regularly.· Supply could get further support as Europe Group III price-premium to US prices rises to highest in more than a year, adding to attraction of moving more shipments to Europe..· Base oils demand in the Middle East could start to revive amid seasonal pick-up in consumption after the summer holidays.· Demand could get additional support from a round of stock-replenishment after a slowdown in shipments from key suppliers in Asia that extended into start of Q3 2024..· Several cargoes from Taiwan and South Korea set to reach UAE in Aug 2024, pointing to such a pick-up in flows.· Premium of CFR UAE Group II heavy-grade price over FOB NE Asia price slides over past month to lowest in more than two years. · Sliding premium makes arbitrage hard to work, could deter further pick-up in shipments to the region.· Demand in Nigeria shows signs of reviving, with marked pick-up in shipments moving to the country in Aug 2024..Asia base oils demand outlook: Week of 19 Aug.Global base oils margins outlook: Week of 19 Aug.Global base oils arb outlook: Week of 19 Aug.Global base oils cargo flows: Week of 19 Aug
· US base oils demand likely to stay well supported over coming month as market heads into peak-hurricane period.· Demand for base oils supplies to build stocks counters for now impact of seasonal slowdown in lube consumption.· Demand could fall more than usual from end-Q3 2024 if any supply disruptions are less severe than planned for, leaving more surplus volumes to clear.· US Group III base oils demand could get support from healthy availability and increasingly competitive price vs Group II light grades.· US Group III 4cSt premium to US domestic Group II light grades extends slide to lowest in more than seven years.· Overseas demand for US supplies from arbitrage buyers likely to remain muted, with US prices uncompetitive versus prices in other regions..· Latin America’s demand for US supplies could stay well supported for now as any additional arbitrage shipments from more distant markets like Asia would likely only reach the region in Q4 2024, when demand typically slows.· Demand for US supplies for more prompt delivery likely to hold firm as blenders and distributors seek to replenish low stocks to cushion against any disruptions to shipments from the US over the coming weeks.· Stocks could be lower after Latin America’s lube demand rises in June 2024 from year earlier for second time in three months..· Lube demand also outpaces base oils supply from regional refiners and from US in June 2024 for fourth straight month..· Shortfall curbs buyers’ opportunity to build inventories, increases the need for additional shipments from other markets..· Chile’s base oils imports rise in July 2024 from previous month, fall from year-earlier.· Chile’s 3-month average base oil/lube imports fall in July 2024 for third time in four months..· Drop in shipments coincides with marked slowdown in Chile’s economic growth at end-Q2 2024 amid dip in manufacturing production and services activity.· Slowdown in economic activity could incentivize blenders to trim their feedstock inventories..· Europe’s base oils demand faces seasonal pick-up in coming weeks as normal activity resumes after summer holidays.· Europe’s lube demand shows more widespread signs of slowing even before Q3 2024, when consumption faced a seasonal dip.· Slowing consumption incentivizes blenders to maintain lower inventories even when they replenish stocks after the summer holidays.· Europe’s firm Group I base oils prices point to persistent buying interest for the grade, despite increasingly competitive prices for premium-grade base oils.· Lack of significant reaction in Europe’s Group II prices relative to higher US prices suggests sellers could have insufficient leverage to adjust prices to reflect the higher US prices.· More limited leverage points to healthy availability of supply or fragile demand.· Europe’s Group III base oils demand could get support from moves to replenish stocks and from competitive prices relative to Group II prices.· Signs of healthy availability of supply give buyers the leverage to procure smaller volumes more regularly.· Supply could get further support as Europe Group III price-premium to US prices rises to highest in more than a year, adding to attraction of moving more shipments to Europe..· Base oils demand in the Middle East could start to revive amid seasonal pick-up in consumption after the summer holidays.· Demand could get additional support from a round of stock-replenishment after a slowdown in shipments from key suppliers in Asia that extended into start of Q3 2024..· Several cargoes from Taiwan and South Korea set to reach UAE in Aug 2024, pointing to such a pick-up in flows.· Premium of CFR UAE Group II heavy-grade price over FOB NE Asia price slides over past month to lowest in more than two years. · Sliding premium makes arbitrage hard to work, could deter further pick-up in shipments to the region.· Demand in Nigeria shows signs of reviving, with marked pick-up in shipments moving to the country in Aug 2024..Asia base oils demand outlook: Week of 19 Aug.Global base oils margins outlook: Week of 19 Aug.Global base oils arb outlook: Week of 19 Aug.Global base oils cargo flows: Week of 19 Aug
