· Seasonal pick-up in US base oils demand would typically start in the coming weeks.· Wide gap between US export and domestic prices could prompt buyers to hold back because of concern about price-adjustment that would narrow the gap.· Persistent availability of export cargoes adds to signs of sufficient supply, curbing urgency to lock in additional volumes.· Overseas demand for US supplies likely to get support from unusually competitive prices.· Pick-up in flow of US shipments to West Africa, and cargo offers to India, reflect moves to tap arbitrage opportunities..· Latin America likely to require smaller volumes from US early this year amid more muted demand and pick-up in regional supply.· Slowdown would contrast with Q4 2023, when Latin America provided ready outlet for wave of supplies from US as lower regional supplies boosted demand for overseas volumes.· US base oils exports to Latin America almost match region’s net demand in Oct and Nov 2023 even as US export volumes rise..· Any ongoing rise in US exports to Latin America would leave the region facing a rising supply surplus and subsequent drop in requirements to clear the surplus.· US base oils exports exceeded Latin America’s net demand throughout most of 2023, when Mexico’s base oils demand exceeded its requirements for lube production.· Mexico’s stricter rules on base oil imports likely to force US base oils exports to Latin America to be more closely aligned with region’s net demand this year..· Slump in Mexico’s December lube demand likely to cut further the country’s requirements for base oils from the US..· Lower demand compounds fall in Latin America’s lube consumption in Dec 2023, adds to pressure on US refiners to move more base oils shipments to other regions instead..· Latin American markets like Peru and Guatemala attract more supplies from Indonesia in Dec 2023.· Shipments likely consist mostly of Group I bright stock.· Shipments point to still-feasible arbitrage even as fob Asia bright stock discount to US export prices narrows sharply in Q4 2023.· Shipments compound Asia’s tight supply of bright stock at start of 2024..· Europe’s base oils demand likely to remain more muted until buyers are comfortable that prices have bottomed out.· Expectations of more muted seasonal rise in demand add to lack of urgency to replenish stocks.· Any larger-than-expected seasonal rise in finished lube demand, combined with blenders’ lower inventories, would deplete those stocks faster than usual.· Lube demand in Italy, Spain and Portugal rises in Dec 2023 from previous year, extending recovery in consumption in Mediterranean region since middle of last year..· Firmer demand cushions impact of still-weak consumption in other key markets like France and Germany, slows size of seasonal slowdown in consumption at year-end.· Smaller seasonal drop in consumption follows slide in Europe’s base oils supply in Oct and Nov 2023, curbing size of regional supply-build at year-end..· Overseas demand for base oils supplies from Europe could get support from more competitive Group I export prices.· Demand in Africa likely to focus more on US Group II supplies.· South Africa’s December base oils imports from US rise to highest in more than a decade..· Rise in shipments highlights surplus US supplies and competitiveness of US prices..· Recent fall in Europe/US export prices boosts feasibility of arbitrage shipments to West Africa.· Several cargoes from Europe and US set to reach Nigeria in coming weeks, adding to surge in flows to the West African country in Feb 2024..Global base oils - week of Feb 19: Demand outlook.Asia base oils - week of Feb 19: Demand outlook.Global base oils - week of Feb 19: Price outlook - arbitrage
· Seasonal pick-up in US base oils demand would typically start in the coming weeks.· Wide gap between US export and domestic prices could prompt buyers to hold back because of concern about price-adjustment that would narrow the gap.· Persistent availability of export cargoes adds to signs of sufficient supply, curbing urgency to lock in additional volumes.· Overseas demand for US supplies likely to get support from unusually competitive prices.· Pick-up in flow of US shipments to West Africa, and cargo offers to India, reflect moves to tap arbitrage opportunities..· Latin America likely to require smaller volumes from US early this year amid more muted demand and pick-up in regional supply.· Slowdown would contrast with Q4 2023, when Latin America provided ready outlet for wave of supplies from US as lower regional supplies boosted demand for overseas volumes.· US base oils exports to Latin America almost match region’s net demand in Oct and Nov 2023 even as US export volumes rise..· Any ongoing rise in US exports to Latin America would leave the region facing a rising supply surplus and subsequent drop in requirements to clear the surplus.· US base oils exports exceeded Latin America’s net demand throughout most of 2023, when Mexico’s base oils demand exceeded its requirements for lube production.· Mexico’s stricter rules on base oil imports likely to force US base oils exports to Latin America to be more closely aligned with region’s net demand this year..· Slump in Mexico’s December lube demand likely to cut further the country’s requirements for base oils from the US..· Lower demand compounds fall in Latin America’s lube consumption in Dec 2023, adds to pressure on US refiners to move more base oils shipments to other regions instead..· Latin American markets like Peru and Guatemala attract more supplies from Indonesia in Dec 2023.· Shipments likely consist mostly of Group I bright stock.· Shipments point to still-feasible arbitrage even as fob Asia bright stock discount to US export prices narrows sharply in Q4 2023.· Shipments compound Asia’s tight supply of bright stock at start of 2024..· Europe’s base oils demand likely to remain more muted until buyers are comfortable that prices have bottomed out.· Expectations of more muted seasonal rise in demand add to lack of urgency to replenish stocks.· Any larger-than-expected seasonal rise in finished lube demand, combined with blenders’ lower inventories, would deplete those stocks faster than usual.· Lube demand in Italy, Spain and Portugal rises in Dec 2023 from previous year, extending recovery in consumption in Mediterranean region since middle of last year..· Firmer demand cushions impact of still-weak consumption in other key markets like France and Germany, slows size of seasonal slowdown in consumption at year-end.· Smaller seasonal drop in consumption follows slide in Europe’s base oils supply in Oct and Nov 2023, curbing size of regional supply-build at year-end..· Overseas demand for base oils supplies from Europe could get support from more competitive Group I export prices.· Demand in Africa likely to focus more on US Group II supplies.· South Africa’s December base oils imports from US rise to highest in more than a decade..· Rise in shipments highlights surplus US supplies and competitiveness of US prices..· Recent fall in Europe/US export prices boosts feasibility of arbitrage shipments to West Africa.· Several cargoes from Europe and US set to reach Nigeria in coming weeks, adding to surge in flows to the West African country in Feb 2024..Global base oils - week of Feb 19: Demand outlook.Asia base oils - week of Feb 19: Demand outlook.Global base oils - week of Feb 19: Price outlook - arbitrage