· US base oils demand could stay muted as buyers eye existing stocks to cover requirements.· US base oils/lube consumption fell in month of September from August in three of previous four years, before rising in month of October..· Repeat of that trend this year would leave buyers with shrinking window to work down existing stocks before slowdown in consumption gathers pace during final two months of 2025.· Buyers’ stocks could still be at healthy levels to cover for weather-related supply disruptions during Atlantic hurricane season.· Lack of any such disruptions so far this summer leaves those inventories untapped.· Buyers face challenge of deciding when to start to cut those inventories while still covering for any supply disruptions in coming weeks.· Buyers could start consuming those stocks rather than procuring additional volumes.· Any such moves would curb demand for replenishment volumes.· Prospect of muted domestic demand increases importance of keeping arbitrage open to move more supplies to overseas markets.· US Group II base oils export prices extend fall in H2 Aug 2025.· Lower prices facilitate arbitrage shipments to outlets like West Africa and India, especially for heavy grades.· Lower Group II prices widen further their discount to Europe Group I export prices..· Wider price-discount boosts attraction for overseas buyers to procure more supplies from US rather than Europe. · Further fall in US Group II base oils prices in H2 Aug 2025 could conversely prompt overseas buyers to hold back until they are confident that prices have bottomed out..· Latin America’s base oils demand for overseas supplies likely to stay cautious.· Signs of muted lube consumption boosts attraction for blenders to procure smaller volumes from domestic sources.· Signs of healthy availability of supplies in overseas markets give buyers flexibility to maintain lower inventories and to secure additional volumes if required.· Brazil’s base oils demand lags supply in July 2025 for third time in four months..· Rising surplus supply and tepid domestic demand boosts attraction of procuring more supplies from domestic sources to keep inventories more balanced.· Buyers’ balanced-to-lower inventories could then leave them better positioned to take advantage of any further fall in prices and rise in surplus base oils supplies from US in coming weeks.· Such a scenario could trigger pick-up in demand for supplies from overseas markets and slowdown in demand for supplies from domestic sources..· Argentina’s lube demand falls in July 2025 for fourth month..· Weaker demand and currency deprecation adds to incentive for blenders to procure smaller feedstock volumes for prompt delivery from domestic rather than overseas sources.· Any such moves could trigger rise in demand for supplies from domestic sources.· Any such moves could be complicated by sharp fall in Argentina’s base oils output in July 2025.· Fall in output triggers steep supply shortfall vs domestic lube demand..· Any extended drop in Argentina’s domestic base oils output could put pressure on blenders to target more supplies from overseas markets.· Any such move could trigger pick-up in demand for supplies from neighbouring markets like Brazil rather than more distant sources like US in view of shorter trans-shipment time. · Argentina’s weaker domestic demand and currency depreciation could still complicate any such moves to seek additional supplies from overseas markets..· Europe’s base oils demand could get seasonal boost in coming weeks as blenders replenish stocks after summer-lull.· Blenders would need sufficient stocks to cover typical strong rebound in lube consumption in month of September.· Any rise in consumption from year-earlier levels would magnify size of rebound in demand in month of September.· Italy’s lube consumption rises in July 2025 for fourth time in five months, raising prospect of such a scenario..· Europe’s lube demand growth trends typically closely track Italy’s lube demand, raising prospect of more widespread recovery in consumption.· Italy’s lube demand rises in July 2025 to highest since Q1 2022..· Any repeat of that dynamic beyond Italy could leave blenders with lower-than-expected stocks before seasonal lull in month of August.· Lower-than-expected stocks could prompt need for larger-than-expected replenishment volumes to cover rise in demand in month of September.· Healthy availability of base oils supply in Europe likely to be more than sufficient to cover any such rise in requirements for additional supplies.· Even so, firm base oils margins for most grades could reflect demand fundamentals that are sufficiently strong to balance out healthy availability of supply.· In recent years, Europe’s lube demand in months of October and November typically holds at similar levels to month of September..· Europe prices for Group II and Group III base oils outperform Group I base oils since start of Q2 2025..· Rising Group II and Group III price-differentials vs Group I base oils point to firmer supply-demand fundamentals for the premium-grade base oils.· Healthy supply of Group II base oils suggests that demand is the key factor supporting firmer price-differentials at least for that grade..· Demand in West and South Africa could get seasonal boost in coming weeks.· Shipment from southern Europe set to reach Nigeria in early-Sept 2025.· South Africa’s demand for overseas supplies could get further support after base oils imports fall in Q2 2025 to lowest level in more than six years..· Tight supplies, upcoming seasonal rise in demand and prospect of rise in surplus volumes in other markets could make the country an attractive outlet for additional shipments in coming months..Argentina’s July lube demand falls.Brazil’s July base oils supply exceeds demand .Italy’s July lube demand rises.Asia base oils demand outlook: Week of 1 September.Global base oils margins outlook: Week of 1 September.Base Oil News stories and analysis also available on ICIS platform
