· US base oils demand likely to wane amid seasonal slowdown in consumption during summer holidays.· Steady outright prices and expectations of healthy availability of supply add to attraction of holding back.· Build-up of additional stocks to cover against weather-related supply disruptions likely to have mostly been completed.· US base oils export price-discount to domestic prices widens in past week for first time since March 2025..· Widening export-price discount points to weaker domestic supply-demand fundamentals, facilitates removal of surplus supplies in overseas markets.· More competitive export prices coincide with signs of tighter-than-usual supply-demand fundamentals in markets like India and Middle East.· More competitive prices should facilitate moves to tap that firmer demand in those overseas markets..· Steady-to-weak US Group III base oils prices add to signs of slack domestic demand..· Prices stay weak relative to light-grade Group II base oils even as plant-maintenance work in Middle East and South Korea curbs supplies from those markets.· Prices stay weak despite US’ reliance on Middle East and South Korea for most of its Group III base oils supplies.· Price-weakness suggests supply remained sufficient to meet lower demand.· Any extension of demand-weakness would contrast with likely recovery in supply following completion of plant-maintenance work.· Weak demand for Group III base oils and snug availability of Group II light grades could point to firmer buying interest in the Group II supplies in place of Group III base oils.· Narrow gap between Group II and Group III prices should, by contrast, support firmer demand for Group III base oils..· Domestic US Group II N600 demand could get support from product's increasingly competitive price vs US Group III 8cSt base oils.· Discount of US Group III 8cSt to Group II N600 shrinks in recent weeks to narrowest level in almost three years..· Narrower Group III 8cSt base oils discount cuts attraction of procuring the product as alternative to higher-priced Group II heavy grades..· Firmer overseas demand for US base oils supplies could extend to Latin America.· Latin America’s lube demand holds firm in May 2025 on strong pick-up in Mexico’s lube consumption..· Any extension of rise in regional demand could point to steadier economic activity and more muted impact of tariff-related concerns.· Any extension of rise in demand would speed up blenders’ need to replenish feedstock supplies.· Any extension of rise in demand could boost blenders’ comfort with and need to hold larger stocks.· Rise in Latin America’s lube demand contrasts with lower base oils supply in May 2025, leaving demand outpacing supply for fifth time in seven months..· Protracted shortfall limits size of any stock-build this year, and likely to sustain firmer demand for replenishment volumes.· US base oils supplies likely to be key beneficiary of any such pick-up in demand.· Arbitrage to move Group II supplies from Asia to Americas gets even harder to work as FOB Asia cargo prices strengthen relative to US prices..· Less feasible arbitrage, and Latin America’s firmer demand, could increase further the region’s demand for base oils supplies from US..· Europe’s base oils demand faces seasonal slowdown, compounding already-weak lube consumption.· Lube demand in Mediterranean region falls in May 2025 for third time in four months, reflecting the sustained dip in consumption..· Seasonal slowdown in activity and sliding lube consumption incentivize blenders to maintain low stocks.· Slowdown in demand would coincide with recovery in base oils supplies following completion of plant-maintenance work.· Slower demand could speed up subsequent build-up of surplus volumes over coming weeks.· Prospect of build-up of surplus volumes adds to attraction of holding back..· Demand for Group I base oils could get support from steeper-than-usual discount to Group II prices, combined with rising Group I supply.· Europe Group II base oils price-premium to domestic Group I base oils falls after rising in early-July 2025 to unusually high level, especially for heavy grades..· Rising Group I supply could also boost overseas demand for any surplus shipments in markets like Middle East.· Global base oils exports to Middle East likely fell in June 2025 amid drop in shipments from Asia..· Drop in shipments coincides with slowdown in base oils exports from Iran.· Dynamic raises prospect of tighter supply in Middle East and subsequent pick-up in demand for additional volumes from markets like Europe.· Any such pick-up in demand could target supplies for delivery in final weeks of Q3 2025..Latin America’s May lube demand rises.Global exports to Middle East fall in June.S Korea June base oils exports to US rise.Global base oils arb outlook: Week of 21 July.Global base oils margins outlook: Week of 21 July.Asia base oils demand outlook: Week of 21 July
