· US base oils buyers likely to continue to maintain lean stocks even at a time of year when lube consumption is typically stronger.· Expectations of sufficient supply and uncertainty about demand outlook add to attraction of maintaining lower stocks.· Latin America’s demand for US base oils supplies could stay muted amid higher US prices, signs of slower end-user demand.· More muted demand would coincide with/curb impact of signs of more limited surplus US supplies available for export for now..· Mexico’s demand for US base oils supplies could stay more muted amid ongoing slide in country’s finished lube consumption..· Demand likely to face additional pressure amid widening premium of US Group II light-grade export prices over heating oil prices.· Wide Group II light-grade premium contrasts with steep discount to heating oil prices in Q1 2024.· Steep discount coincided with surge in US base oils/lube exports to Mexico that far outpaced country’s finished lube requirements..· Fall in Mexico’s lube demand adds to slide in Latin America’s lube consumption in March 2024.· Region’s lube consumption falls in March 2024 for third time in four months from year-earlier levels..· More muted demand and signs of healthy regional supply likely to curb impact of any drop in availability of spot base oils volumes from US in Q2 2024..· Europe’s demand for Group I base oils could get support from concern about tighter supply.· Europe’s tighter availability of Group I base oils highlights risk of using the supplies in formulations, incentivizes blenders to use alternative grades instead.· Lack of alternative product to replace Group I brightstock could support firmer demand for the heavy-grade base oil in response to tighter-than-expected supply.· Europe’s Group III 4cSt (low) premium to domestic Group I SN 150 price holds close to lowest since Q3 2022.· Narrow premium boosts incentive for blenders to use more premium-grade base oils.· Signs of mixed finished lube demand growth in Europe sustains incentive for blenders to maintain low stocks and to procure smaller volumes more frequently.· Overseas demand for Europe’s Group I base oils could ebb amid tighter supply, increasingly high export prices relative to prices in overseas markets.· Lower overseas demand could have more limited impact on European refiners, which now face tighter structural availability of supply.· Spain’s March lube demand falls year-on-year for first time in ten months..· Fall in demand mirrors similar trend in Italy and Portugal.· Demand drops in markets that had previously cushioned the sustained fall in lube consumption in Germany and France in 2023.· Any extension of slowdown in lube demand in Germany and France would reverse recovery in Europe’s lube consumption in late-2023.· Weak demand adds to preference among blenders and base oils suppliers to maintain low stocks.· Any extension of demand-weakness in Europe in Q2 2024 would coincide with signs of improving supply of premium-grade base oils.· Any such disconnect between supply and demand fundamentals could keep pressure on regional prices. .Global base oils margins outlook: Week of 20 May.Global base oils arb outlook: Week of 20 May.Global base oils demand outlook: Week of 20 May.Asia base oils demand outlook: Week of 20 May
· US base oils buyers likely to continue to maintain lean stocks even at a time of year when lube consumption is typically stronger.· Expectations of sufficient supply and uncertainty about demand outlook add to attraction of maintaining lower stocks.· Latin America’s demand for US base oils supplies could stay muted amid higher US prices, signs of slower end-user demand.· More muted demand would coincide with/curb impact of signs of more limited surplus US supplies available for export for now..· Mexico’s demand for US base oils supplies could stay more muted amid ongoing slide in country’s finished lube consumption..· Demand likely to face additional pressure amid widening premium of US Group II light-grade export prices over heating oil prices.· Wide Group II light-grade premium contrasts with steep discount to heating oil prices in Q1 2024.· Steep discount coincided with surge in US base oils/lube exports to Mexico that far outpaced country’s finished lube requirements..· Fall in Mexico’s lube demand adds to slide in Latin America’s lube consumption in March 2024.· Region’s lube consumption falls in March 2024 for third time in four months from year-earlier levels..· More muted demand and signs of healthy regional supply likely to curb impact of any drop in availability of spot base oils volumes from US in Q2 2024..· Europe’s demand for Group I base oils could get support from concern about tighter supply.· Europe’s tighter availability of Group I base oils highlights risk of using the supplies in formulations, incentivizes blenders to use alternative grades instead.· Lack of alternative product to replace Group I brightstock could support firmer demand for the heavy-grade base oil in response to tighter-than-expected supply.· Europe’s Group III 4cSt (low) premium to domestic Group I SN 150 price holds close to lowest since Q3 2022.· Narrow premium boosts incentive for blenders to use more premium-grade base oils.· Signs of mixed finished lube demand growth in Europe sustains incentive for blenders to maintain low stocks and to procure smaller volumes more frequently.· Overseas demand for Europe’s Group I base oils could ebb amid tighter supply, increasingly high export prices relative to prices in overseas markets.· Lower overseas demand could have more limited impact on European refiners, which now face tighter structural availability of supply.· Spain’s March lube demand falls year-on-year for first time in ten months..· Fall in demand mirrors similar trend in Italy and Portugal.· Demand drops in markets that had previously cushioned the sustained fall in lube consumption in Germany and France in 2023.· Any extension of slowdown in lube demand in Germany and France would reverse recovery in Europe’s lube consumption in late-2023.· Weak demand adds to preference among blenders and base oils suppliers to maintain low stocks.· Any extension of demand-weakness in Europe in Q2 2024 would coincide with signs of improving supply of premium-grade base oils.· Any such disconnect between supply and demand fundamentals could keep pressure on regional prices. .Global base oils margins outlook: Week of 20 May.Global base oils arb outlook: Week of 20 May.Global base oils demand outlook: Week of 20 May.Asia base oils demand outlook: Week of 20 May
