Americas/EMEA base oils demand outlook: Week of 22 July

·        US base oils demand likely to get ongoing support from moves to build stocks.

·        Stock-building brings forward future demand, counters for now the impact of weaker end-user demand.

·        Round of stock-building could take longer than expected amid more limited surplus availability of supplies.

·        Overseas demand for US supplies could ebb in markets with alternative supply options and where prices are lower.

·        Demand from India and Middle East likely to fall as US prices extend premium to CFR prices in those markets.

·        Demand for US supplies shows signs of holding firm in South Africa and West Africa in July 2024.

·        Shipments to those markets likely partly reflects some term volumes and partly reflects tighter availability in Europe.

·        Latin America’s base oils demand for overseas supplies is likely to hold firm even as consumption continues to trend lower so far this year.

·        Demand falls as ongoing slide in consumption in Mexico and Argentina counters firmer demand in Brazil.

·        Mexico’s May lube demand falls for twelfth time in thirteen months as auto lube consumption extends slide.

·        Slowdown in demand lags even steeper fall in US base oils exports to Mexico and South America so far this year.

·        Trend leaves Latin America’s base oils supply barely covering demand in recent months.

·        Trend raises prospect of sustaining strong demand from Latin America for overseas base oils supplies.

·        Trend boosts incentive for Latin America’s buyers to eye supplies from other sources besides US.

·        Region’s reliance on US for most of its overseas shipments adds to that incentive to diversify its sources as hedge against supply disruptions.

·        Group I base oils demand in Europe could start to ease as seasonal slowdown in consumption coincides with improvement in supply.

·        Group I demand likely to hold firm in overseas markets for which Europe was previously a key source.

·        Europe’s high export prices could dampen overseas demand for the region's supplies even if availability improves.

·        Europe’s Group I base oils exports to markets outside the region extend slowdown in May 2024 from year-earlier levels.

·        Europe’s lube demand shows signs of staying more mixed through Q2 2024.

·        Mixed lube consumption growth in some of region’s largest markets curbs incentive for blenders to build larger inventories.

·        Mixed lube consumption growth leaves market facing typical seasonal dip in consumption in third quarter, especially in month of August.

·        Mixed lube demand in different countries leaves total consumption for the region relatively steady.

·        Steady total demand would facilitate base oils refiners’ supply plans for the region.