· US base oils demand could get support from higher crude oil prices that curb prospect of fall in base oils prices.· Even so, expectations of ready availability of supplies, combined with seasonal slowdown in lube consumption in coming weeks, likely to incentivize buyers to maintain low stocks.· Buyers face ongoing challenge of balancing expectations of weak fundamentals with repercussions of higher crude oil prices and risk of weather-related supply disruptions during Atlantic hurricane season..· Overseas demand for US supplies could ease following rise in outright Group II export prices and concern about pick-up in price-volatility.· Higher export prices cuts CFR India price-premium to US Group II N600 prices to narrowest level since end-Feb 2025..· Even with higher US export prices, CFR India price-premium remains wider than usual for time of year, contrasts with US prices flipping to premium to CFR India prices in Q2 2024.· Still-wide CFR India premium suggests any US supply-tightness is temporary, with limited price adjustments required to trigger a resumption of arbitrage flows.· Wide CFR India price-premium so far this year points to and helps to remove persistent surplus volumes of mid- and heavy-grade supplies from US market.· Wide CFR India price-premium coincides with India's sustained imports of mid- and heavy-grade base oils shipments from US so far this year..· Signs of persistent surplus volumes of US heavy grades increases importance of sustaining that buying interest in markets like India.· Discount of US Group II N600 export price to US N600 domestic price shrinks to narrowest level in more than nine months..· Dynamic could point to price-support at that level, raising prospect of firmer domestic prices or downward pressure on export prices..· Latin America’s base oils demand could be more muted in face of shrinking lube consumption and growing surplus supplies.· Region's lube demand typically rises at start of third quarter of the year before trending lower over following months.· Fall in consumption from year-earlier levels could magnify that slowdown..· Weaker lube demand would follow drop in region’s lube consumption for third straight month in April 2025..· Demand falls as Mexico’s lube consumption slumps by more than 20%..· Mexico’s weaker lube consumption coincides with fall in country’s automobile production for second straight month in May 2025.· Dynamic adds to signs of weaker economic activity in Mexico following imposition of US tariffs on sectors such as automobile industry..· Even if more muted, Latin America’s base oils demand likely to rely on supplies from US for now amid less feasible arbitrage from other regions like Asia and Europe.· South Korea’s base oils exports to Latin America stay lower than usual in May 2025 and Jan-May 2025..· Lower exports reflect tighter supply in Asia so far this year.· Expectations of rising surplus supply in Asia over coming months could trigger pick-up in exports to markets like Latin America.· Size of any such surplus supply could now be more manageable after recent slump in base oils margins boosts incentive for Asia refiners to cut run-rates.· Any such scenario could curb volume of arbitrage flows from Asia, leaving buyers in Latin America almost fully reliant on supplies from the US..· Europe’s base oils demand could turn more cautious, cushioning impact of recent jump in crude oil prices.· Any moves by suppliers to target higher prices in response to higher feedstock costs could add to buyers’ reluctance to procure additional supplies.· Prospect of rise in base oils availability in coming weeks increases importance for suppliers to sustain rather than curb regional buying interest.· Europe’s lube demand faces typical rise in month of July before sharp seasonal slowdown in month of August.· Dynamic likely to trigger fall in Europe’s lube demand in third quarter from previous three months. .· Blenders are likely focusing more on slowdown in activity in month of August after already securing requirements for next month.· Seasonal slowdown in demand, combined with ongoing fall in Europe’s consumption from year-earlier levels, curbs blenders’ urgency to lock in additional volumes to cover for any unexpected supply disruptions..· France’s lube demand falls in April 2025 for third time in four months, highlighting ongoing slowdown throughout most of Europe..· Premium of Europe Group II heavy-grade price over Group I heavy neutrals continues to widen..· Widening premium could support firmer demand for Group I heavy neutrals once availability begins to improve.· Availability of Group I heavy neutrals likely to improve following completion of regional plant-maintenance work and as demand faces seasonal slowdown in coming weeks..Latin America’s April lube demand falls.S Korea May base oils exports to US fall.Asia base oils demand outlook: Week of 23 June.Global base oils margins outlook: Week of 23 June
