· Rise in US refiners’ posted prices typically reflects factors such as higher feedstock costs and tighter supply-demand fundamentals.· US base oils demand typically rises in anticipation of/ahead of rise in refiners’ posted prices.· Signs of muted rise in demand ahead of rise in posted prices, and signs of healthy availability, suggest that higher feedstock costs were the key driver behind this month’s rise in posted prices.· US demand could still get a boost from seasonal pick-up in consumption and as blenders need to replenish lower inventories more frequently.· US demand unlikely to get much extra boost from rise in posted prices, which barely match rise in feedstock costs.· Expectations of ready availability of supply incentivize blenders to maintain lower stocks.· US export prices stay unusually competitive, sustaining prospect of strong overseas demand for US supplies.· Latin America’s base oils demand could get support from signs of strong lube consumption in markets like Brazil so far this year..· Latin America’s January lube demand edges up year-on-year as growth in markets like Brazil and Chile counter weaker consumption in Argentina and Mexico..· Latin America’s demand for US base oils still faces prospect of easing in response to rise in regional supply.· Higher-than-usual flow of US base oils shipments to Latin America in Jan 2024 raise prospect of adding to region’s surplus supply..· Chile’s base oils imports fall in Feb 2024 year-on-year, still rise by 7% in first two months of 2024 amid signs of firmer economic activity in the country at the start of the year..· Europe’s regional base oils demand could get a boost from seasonal pick-up in lube demand and signs of tighter surplus availability.· Overseas demand for Europe supplies could ease as higher export prices complicate arbitrage opportunities. · Narrowing discount of Europe Group I export prices to domestic prices in March 2024 points to tighter surplus availability and firmer overseas demand.· Europe Group I bright stock export price discount to domestic price almost disappears.· Firmer overseas competition for tighter supplies coincides with prospect of seasonal pick-up in regional demand over coming weeks.· Tighter surplus availability gives producers more leverage to target firmer prices.· Possibility of tighter surplus availability and firmer prices could spur further pick-up in regional demand.· Europe Group III (low) price premium to Group II base oils stays at lower level since end-2023.· Steady Group III premium at lower level could boost incentive for blenders to use more Group III in place of Group II base oils.· Wide discount of US export prices to Europe Group II prices sustains attraction of lining up more trans-Atlantic arbitrage shipments from US.· France’s lube demand falls more sharply in Dec 2023, extending contrast with firmer consumption in markets in southern Europe.· Sustained slowdown cuts France’s lube consumption by 8% in 2023 to lowest in more than five years..· Sustained slowdown in France’s lube consumption curbs prospect of any rapid recovery in 2024..· Base oils exports to Nigeria from US/Europe and Baltic markets falls in Jan 2024 from previous month..· Slowdown in shipments raises prospect of sustained demand from Nigeria for additional supplies.· Pick-up in flows from Baltic market to Nigeria in Dec 2023 and Jan 2024 contrast with slowdown in shipments from Europe in the four months to Jan 2024.· Trend points to establishment of a structure that enables more supplies to move from Baltic region to Nigeria.· Trend could get further traction if exports from Europe to Nigeria remain lower over the coming months..· Demand in Mideast Gulf for Group II supplies from Asia could get sustained boost until flows from Saudi Arabia revert to normal..· Exports from US and Europe to Mideast Gulf fall to five-year low in Jan 2024..· Trend raises prospect of increasingly tight availability of higher-quality Group I base oils in Mideast Gulf market.· Trend adds to importance of supplies from Asia to cover Mideast Gulf’s requirements for higher-quality base oils..Asia base oils demand outlook: Week of March 25.Global base oils margins outlook: Week of March 25.Global base oils arb outlook: Week of March 25
