· US base oils demand shows signs of seasonal improvement.· Limited change in US domestic spot prices in recent weeks suggests strength of rise in demand remains muted, and that buyers are able to secure sufficient supplies with ease.· Signs of smaller-than-usual seasonal rise in demand and buyers’ preference to maintain lower stocks point to ongoing surplus supply, even if smaller than in Q1 2024.· Shipment of several large cargoes from US at end-March 2024 and through April 2024 to overseas markets like India suggests that domestic supply continues to outweigh demand.· US Group III 4cSt premium to Group II light-grade base oils falls to lowest since Q1 2021.· Narrower premium could boost incentive for blenders to use more Group III base oils instead of Group II.· Latin America’s base oils demand could get boost from prospect of more balanced fundamentals in the region and signs that slowdown in some markets may be close to bottoming out..· Mexico’s February lube demand falls for tenth month but pace of contraction slows..· US’ February base oils exports to Mexico exceed Mexico’s lube demand by largest volume in five months..· Size of US export surplus remains lower than during first nine months of 2023, adding to signs that US exports to Mexico are likely to hold steadier over coming months..· Latin America’s lube demand holds steady in Feb 2024 from the previous month, contrasting with likely fall in US demand during the same period..· Region’s steady demand boosts attraction for US refiners to move more supplies to Latin America.· US exports duly rise to Mexico in Feb 2024, but fall to Brazil and Argentina.· Trend adds to signs of US export cargoes targeting certain key outlets for spot shipments, such as Middle East, West Africa and Mexico.· Trend would avoid a large supply-build in markets that are more regular term buyers from US..· Europe’s base oils demand faces seasonal pick-up, combined with prospect of blenders seeking to maintain lower inventories.· Regional buyers could face growing competition for Group I supplies as rising export prices boost attraction of moving supplies to overseas markets.· Demand for Group III base oils could get support from their competitive prices vs Group I/II base oils.· Buyers could conversely prefer to hold off procuring more Group III base oils after recent slide in US Group III prices highlights global surplus of the product and raises prospect of more volumes moving to Europe.· Spain’s February lube demand extends rise for ninth month, mirroring similar recovery in Italy’s lube consumption..· Sustained rise in demand coincides with signs that slowdown in lube consumption in Germany and France began to bottom out early this year.· Any extension of recovery to those markets could trigger a stronger rise in base oils requirements after winter-lull and after blenders maintained low base oils inventories.· Blenders likely to continue to maintain low feedstock inventories unless there are clear signs of tighter supply and stronger demand..· Demand in the Middle East for Group II base oils could ease as a wave of supplies starts to reach the region after loading from Asia and US in Q1 2024..· The region’s demand for Group II base oils could conversely get further support from increasingly tight availability of high-quality Group I base oils and the narrowing premium of Group II prices to Group I base oils prices.· Tighter Group I supply could boost the attraction of moving more base oils of Russian origin to the Middle East.· Any such shipments would still leave the region short of high-quality Group I base oils..Global base oils demand outlook: Week of 22 April.Asia base oils demand outlook: Week of 22 April.Global base oils margins outlook: Week of 22 April.Global base oils arb outlook: Week of 22 April
