· US base oils demand likely to stay muted as concern about end-user consumption and signs of sufficient supply incentivize buyers to maintain low stocks.· Expectations of steady or lower base oils prices add to attraction of holding back.· US refiner’s posted-price cut last week was first such adjustment in more than six months.· Price-cut contrasts with US refiners’ more typical moves to raise posted prices in second quarter of the year in response to firmer supply-demand fundamentals.· Heavy round of plant maintenance work tightens US supply fundamentals from end-Q1 2025.· Lack of posted-price increases suggest concern about demand fundamentals outweighs tighter supply fundamentals.· US blenders face dilemma over coming weeks of extent of any stock-building as buffer against weather-related supply disruptions during Atlantic hurricane season.· Muted domestic demand would increase importance of overseas demand holding firm to absorb more US supplies.· US Group II heavy-grade export price maintains steep discount to CFR India price, sustaining feasibility of that arbitrage.· US light and heavy-grade base oils prices maintain steep discount to domestic Europe prices..· Steep discount boosts attraction of moving more volumes to that market.· Preference to move surplus supplies to other outlets rather than to Europe could limit any pick-up in shipments to that market..· Latin America’s demand for additional base oils supplies from overseas markets could stay more muted as signs of weak lube consumption boost the attraction of holding low stocks.· Blenders face challenge of balancing concerns about demand with risk of supply disruptions during Atlantic hurricane season.· Latin America’s lube demand falls in March 2025 for second month from year-earlier levels amid dip in consumption in region’s largest markets..· Weaker demand contrasts with rise in base oils supplies amid surge in US exports to the region.· Supply duly outpaces demand in March 2025 for first time in five months and by largest volume since end-2023..· Blenders’ low stocks enable them to absorb the surge in supplies.· Preference to maintain low stocks could delay requirements for another large wave of base oils supplies.· That preference could have more muted impact in early-Q2 2025, when plant maintenance work trims US' surplus supply.· That preference could have larger impact later in Q2 2025 as US supply recovers following completion of plant maintenance work.· Any demand for additional volumes from US to boost stocks ahead of Atlantic hurricane season would follow similar rise in US exports to South America in Q2 2024 from year-earlier levels..· Mexico’s lube demand likely to face growing pressure even after dip in lube consumption almost pauses in March 2025.· Pick-up in Mexico’s auto lube consumption cushions impact of ongoing slide in industrial oils consumption in March 2025..· Steadier lube demand coincides with rising automobile production in Mexico in Q1 2025.· Mexico’s automobile production then falls in April 2025 for first time in thirteen months, coinciding with imposition of US tariffs on automobile imports.· Dynamic suggests Mexico's auto lube consumption could face similar downward pressure in Q2 2025. .· Europe’s base oils demand likely to stay cautious as mixed signals about lube consumption incentivize blenders to maintain low stocks.· Low stocks could trigger and magnify short-term pick-up in demand in response to firmer consumption or tighter supply.· Demand could duly get some support from tighter supply during round of plant maintenance both in Europe and in markets that supply Europe.· Spain’s lube demand rises in March 2025 for third time in four months..· Spain’s strong lube demand growth since end-2024 contrasts with recovery in consumption in Italy only from March 2025.· Signs of more widespread recovery in Europe’s lube consumption in March 2025 could face pressure in Q2 2025 because of uncertainty about tariffs and their impact on economic activity..· Demand for premium-grade base oils could get boost from signs of more-readily-available supply compared with Group I base oils.· US base oils exports to Europe hold steady in Q1 2025 even with round of plant maintenance in that country..· Europe’s Group I base oils supply could fall in Q1 2025 because of plant maintenance in markets like Italy.· Contrasting trends reflect availability of alternative supplies in US that help to cover for maintenance work, and lack of availability of alternative supplies in Europe, magnifying impact of maintenance work..Asia base oils demand outlook: Week of 19 May.Global base oils margins outlook: Week of 19 May.Global base oils arb outlook: Week of 19 May.Latin America March lube demand falls
