Americas/EMEA base oils demand outlook: Week of 21 April

·         Seasonal rise in US base oils demand likely to be more muted as concern about economic slowdown incentivizes blenders to maintain lower stocks.

·         Weak demand and rising surplus supply typically puts more pressure on export prices before domestic prices.

·         US base oils domestic prices instead fall while export prices hold steady so far in April 2025.

·         Weaker domestic demand boosts importance of firm buying interest from overseas markets to avoid build-up of surplus supplies.

·         Buying interest from overseas markets could get more challenging amid concern about weaker economic growth and expectations of improving base oils supply from Asia.

·         Concern about tariff-related supply disruptions could incentivize Latin America’s buyers to trim their reliance on US, the source of most of their imports currently.

·         Tighter supply and firm prices for US light-grade base oils add to buyers' incentive to seek light grades from other markets like Asia.

·         Asia’s Group II light-grade price discount to US export prices starts to widen in H2 April 2025, after narrowing in recent months.

·         South Korea’s base oils exports in March 2025 include large cargo to Brazil.

·         Cargo is second such large shipment to Brazil in past four months.

·         Any further widening of Asia Group II light-grade price-discount to US prices could trigger pick-up in such flows.

·         Latin America’s base oils demand could stay weaker than usual as fall in lube demand gathers pace in markets like Mexico.

·         Demand falls as uncertainty about timing and extent of US tariffs compounds weak or slowing economic growth in key markets in Latin America.

·         Mexico’s lube demand falls in Feb 2025 for fourth month and at fastest pace in eight months.

·         Lube demand falls amid 19% slump in consumption of industrial oils.

·         Chile’s base oils/lube imports rebound in March 2025, balancing out slump in shipments in Feb 2025.

·         Chile’s base oils imports still fall in three months to March 2025 from year earlier for second month in a row.

·         Slowdown in shipments coincides with drop in Chile’s economic activity in Feb 2025 for first time in eight months.

·         Europe’s base oils demand likely to stay cautious amid uncertainty about economic outlook and signs of still-weak lube consumption.

·         Lower crude oil prices, firm base oils margins and healthy availability of supply of most grades incentivize blenders to maintain low stocks.

·         Lack of any sustained recovery in lube consumption adds to attraction of holding lower inventories.

·         Spain’s lube demand falls in Feb 2025 from year earlier after rising in each of the previous two months.

·         Contraction mirrors similar slowdown in Italy’s lube demand, adding to dip in consumption in key European markets.

·         Europe’s Group III base oils price-differential vs Group I and Group II base oils stays unusually narrow.

·         Competitive Group III prices could support firmer demand for the premium-grade supplies.

·         Demand in Middle East for Group II base oils could get support after South Korea’s exports to UAE fall sharply in March 2025.

·         Dip in shipments points to tighter availability of surplus supplies in late-Q1 2025.

·         Dip in shipments coincides with Group II plant maintenance in South Korea.

·         Buyers could prefer to hold back and tap existing stocks for now in face of lower crude oil prices and expectations of improving availability of supply in coming weeks.