· US base oils demand could ease as buyers start to focus on impact of seasonal slowdown on already-weak lube consumption in Q4 2024.· Concern about weak end-user demand likely to boost importance of using up and trimming surplus supplies.· Focus on stock-management likely to curb further buyers’ interest in seeking additional supplies.· Weakening fundamentals and still-high base oils prices relative to other markets support expectations of further downward price pressure.· Expectations of lower prices add to incentive for buyers to curb their procurement plans for now.· Arbitrage to overseas markets like India stays hard to work even after recent drop in prices.· Signs of regular shipments to India throughout Q3 2024 suggest prices for some cargoes were at levels that attracted sufficient buying interest in that market.· Latin America’s base oils demand similarly likely to ebb as seasonal slowdown in consumption and expectations of lower prices curb buying interest.· Region’s demand for US supplies could get boost if arbitrage from Asia were to close.· Arbitrage from Asia to Americas starts to turn more marginal in Sept 2024..· Latin America’s lube demand rises in July 2024 for third time in four months..· Rising demand boosts attraction for global blenders to prioritise Latin America market, when consumption is shrinking in US and Europe.· Latin America's rising demand contrasts with lower base oils supply from regional refiners and from US shipments to the region.· US base oils exports to South America fall to close to eleven-month low in July 2024..· Lower regional output and drop in shipments from US leave supply lagging demand for fifth month in July 2024..· Dynamic increases importance of steady-to-higher base oils output from regional refiners.· Any further rise in Latin America’s lube demand would increase further the region’s reliance on supplies from overseas markets.· That growing reliance could be less visible in coming months amid likely seasonal slowdown in demand in Q4 2024.· That growing reliance is likely to become more apparent in 2025 if demand continues to rise..· Mexico’s lube demand falls for third straight month in July 2024, but pace of contraction slows sharply from previous two months..· Any extension of that trend would suggest the prolonged slide in Mexico’s lube consumption is bottoming out..· Europe’s base oils demand could get support as seasonal pick-up in consumption magnifies impact of buyers’ low stocks.· Demand could get additional support from signs of smaller-than-usual build-up of surplus base oils supplies in Europe at start of Q3 2024.· Smaller-than-usual supply-build curbs pressure on sellers to take action to clear large volumes. · Even so, expectations of sufficient supplies and high base oils prices relative to feedstock costs sustain incentive for blenders to procure smaller volumes more frequently.· Europe’s Group II base oils prices hold firmer relative to Group I, extend rise vs US/Asia prices.· Relative price strength points to tighter Group II supply/firmer demand fundamentals, despite completion of regional plant maintenance work at start of Q2 2024.· Europe’s lube demand growth stays uneven in July 2024.· France’s lube demand rises in July 2024 for first time in three months; Spain’s lube demand rises in July 2024 after falling the previous month..· Lack of sustained recovery in demand incentivizes blenders to maintain low base oils/lube stocks.· Low stocks magnify impact of seasonal rise in lube demand in late-Q3.· Low stocks curb blenders’ ability to put off procuring base oils supplies even after slide in feedstock costs raise concern about exposure to lower base oils prices..· Demand for Group I base oils in the Middle East could stay firmer amid signs a pick-up in shipments from Europe and Asia to the region in early Q3 2024 consisted more of premium-grade base oils.· Exports from continental Europe to the UAE consisted mostly of supplies from the Netherlands, with increasingly limited volumes from Italy..· Italy was previously a key supplier of Group I base oils for the UAE.· CFR UAE Group II heavy-grade premium to Group I base oils price narrows sharply over last two months..· Narrower premium adds to signs of increasingly tight Group I supply..Asia base oils demand outlook: Week of 23 Sept.Global base oils demand outlook: Week of 23 Sept.Global base oils arb outlook: Week of 23 Sept.Latin America’s July lube demand rises.Europe’s July lube demand improves.Global base oils exports to Middle East rise in July
· US base oils demand could ease as buyers start to focus on impact of seasonal slowdown on already-weak lube consumption in Q4 2024.· Concern about weak end-user demand likely to boost importance of using up and trimming surplus supplies.· Focus on stock-management likely to curb further buyers’ interest in seeking additional supplies.· Weakening fundamentals and still-high base oils prices relative to other markets support expectations of further downward price pressure.· Expectations of lower prices add to incentive for buyers to curb their procurement plans for now.· Arbitrage to overseas markets like India stays hard to work even after recent drop in prices.· Signs of regular shipments to India throughout Q3 2024 suggest prices for some cargoes were at levels that attracted sufficient buying interest in that market.· Latin America’s base oils demand similarly likely to ebb as seasonal slowdown in consumption and expectations of lower prices curb buying interest.· Region’s demand for US supplies could get boost if arbitrage from Asia were to close.· Arbitrage from Asia to Americas starts to turn more marginal in Sept 2024..· Latin America’s lube demand rises in July 2024 for third time in four months..· Rising demand boosts attraction for global blenders to prioritise Latin America market, when consumption is shrinking in US and Europe.· Latin America's rising demand contrasts with lower base oils supply from regional refiners and from US shipments to the region.· US base oils exports to South America fall to close to eleven-month low in July 2024..· Lower regional output and drop in shipments from US leave supply lagging demand for fifth month in July 2024..· Dynamic increases importance of steady-to-higher base oils output from regional refiners.· Any further rise in Latin America’s lube demand would increase further the region’s reliance on supplies from overseas markets.· That growing reliance could be less visible in coming months amid likely seasonal slowdown in demand in Q4 2024.· That growing reliance is likely to become more apparent in 2025 if demand continues to rise..· Mexico’s lube demand falls for third straight month in July 2024, but pace of contraction slows sharply from previous two months..· Any extension of that trend would suggest the prolonged slide in Mexico’s lube consumption is bottoming out..· Europe’s base oils demand could get support as seasonal pick-up in consumption magnifies impact of buyers’ low stocks.· Demand could get additional support from signs of smaller-than-usual build-up of surplus base oils supplies in Europe at start of Q3 2024.· Smaller-than-usual supply-build curbs pressure on sellers to take action to clear large volumes. · Even so, expectations of sufficient supplies and high base oils prices relative to feedstock costs sustain incentive for blenders to procure smaller volumes more frequently.· Europe’s Group II base oils prices hold firmer relative to Group I, extend rise vs US/Asia prices.· Relative price strength points to tighter Group II supply/firmer demand fundamentals, despite completion of regional plant maintenance work at start of Q2 2024.· Europe’s lube demand growth stays uneven in July 2024.· France’s lube demand rises in July 2024 for first time in three months; Spain’s lube demand rises in July 2024 after falling the previous month..· Lack of sustained recovery in demand incentivizes blenders to maintain low base oils/lube stocks.· Low stocks magnify impact of seasonal rise in lube demand in late-Q3.· Low stocks curb blenders’ ability to put off procuring base oils supplies even after slide in feedstock costs raise concern about exposure to lower base oils prices..· Demand for Group I base oils in the Middle East could stay firmer amid signs a pick-up in shipments from Europe and Asia to the region in early Q3 2024 consisted more of premium-grade base oils.· Exports from continental Europe to the UAE consisted mostly of supplies from the Netherlands, with increasingly limited volumes from Italy..· Italy was previously a key supplier of Group I base oils for the UAE.· CFR UAE Group II heavy-grade premium to Group I base oils price narrows sharply over last two months..· Narrower premium adds to signs of increasingly tight Group I supply..Asia base oils demand outlook: Week of 23 Sept.Global base oils demand outlook: Week of 23 Sept.Global base oils arb outlook: Week of 23 Sept.Latin America’s July lube demand rises.Europe’s July lube demand improves.Global base oils exports to Middle East rise in July
