· US base oils demand could be more muted over coming weeks following completion of any moves to replenish stocks at start of the year.· Seasonal dip in lube consumption during winter months and signs of healthy availability of supply add to attraction of maintaining lower stocks for now.· Demand could get support from rising crude oil prices, curbing expectations of lower base oils prices.· More limited downward price pressure incentivizes blenders to maintain rather than hold off their scheduled procurement plans.· Overseas demand for US supplies could get support from more limited surplus supply in other markets like Europe and Asia.· More feasible arbitrage to outlets like India and Middle East could sustain buying interest in those markets..· Demand could get further support from expectations of firmer base oils prices on the back of rising feedstock prices and prospect of firmer supply-demand fundamentals in coming months.· Dynamic would boost attraction of securing additional supplies at current price levels..· Latin America’s base oils demand could hold firm early this year amid signs of balanced-to-tight supply-demand fundamentals in late-2024.· Support for additional base oils from the US could be limited.· Latin America’s lube demand falls in Nov 2024 from Oct 2024 at slower pace than drop in region’s base oils supply.· Dynamic leaves supply-demand fundamentals relatively balanced at year-end..· Lack of any large supply overhang likely to prompt blenders to seek replenishment supplies early this year in preparation for rise in demand later in Q1.· Firm regional base oils output would curb blenders’ requirements for additional volumes from overseas markets.· More muted lube consumption growth and currency volatility adds to attraction of procuring smaller volumes from more local sources..· Chile’s base oils demand shows signs of slowing at end-2024, with imports dipping in Dec 2024 from year earlier for first time in four months..· Imports in three months to Dec 2024 continue to trend higher, lifting total shipments in 2024 by 6% from previous year..· Mexico’s lube demand resumes fall in Nov 2024, adding to signs of weaker consumption growth in Latin America..· Weaker consumption curbs prospect of pick-up in requirements for additional supplies from US market.· Any pick-up in base oils shipments from other markets to Latin America would compound any slowdown in demand for supplies from US..· Shipments from other markets duly materialize, with South Korea’s base oils exports to Brazil surging to multi-year high in Dec 2024..· Shipments surge even with less feasible arbitrage from Asia to Americas..· Europe’s base oils demand likely to stay muted as weak lube consumption incentivizes blenders to maintain low inventories.· Ready availability of most base oils grades gives blenders flexibility to procure supplies as and when required, adding to attraction of maintaining lower stocks.· Any change in demand for Group I base oils more likely to reflect rise in requirements for premium grades in lubricant formulations rather than concern about sufficient availability of Group I supply.· Group I base oils remain readily available even with shrinking regional production capacity in recent years, allaying concerns about security of supply.· Premium of Europe Group III 4cSt (low) price over Group II N150 shrinks to lowest since mid-2021..· Narrowing price premium could complicate any moves to adjust Group II prices higher.· Even with narrower price premium, any pick-up in demand for Group III base oils remains insufficient to absorb persistent surplus supply..· Turkey’s demand for Group I base oils from Russia likely to hold firm, with shipments freeing up domestic supplies from Turkey to move to other markets like Europe and north Africa.· Premium of domestic Europe Group I SN 150 over Turkey’s imported cargo price for supplies from Russia edges down in Nov 2024 to its lowest level in five months..· Premium is still up more than threefold from year-earlier levels.· Turkey’s Group I base oils imports from Europe still rebound to seven-month high in Nov 2024, exceeding volumes from Russia for first time since April 2024..· Rise in Turkey's imports from Europe removes more surplus supplies from that market, where lube demand faced seasonal slowdown at year-end.· Removal of surplus Group I shipments trims size of build-up of surplus supplies in Europe at end-2024..Asia base oils demand outlook: Week of 20 Jan.Global base oils margins outlook: Week of 20 Jan.Global base oils arb outlook: Week of 20 Jan.Latin America Nov lube demand holds steady
