· Moves by some US refiners to raise US posted prices coincide with a time of year when domestic demand typically gets a seasonal boost.· Moves to raise posted prices often trigger pick-up in demand as buyers seek to lock in more supplies before price increases take effect.· Moves by some US refiners to raise posted prices instead point to a response to squeezed margins or refinery-specific factors rather than a recent pick-up in domestic demand.· Any pick-up in domestic demand would likely initially impact availability for export and support firmer US export prices.· Fall in US base oils export prices in Feb 2024 point to ongoing availability of surplus supplies.· Any signs of ongoing availability of export cargoes, and any signs of still-cautious domestic demand, could complicate moves to raise posted prices.· Any signs of more widespread posted-price-increases could by contrast complicate buyers’ decision to hold back.· Demand for US export cargoes likely to hold firm amid unusually competitive export prices.· US Group III price premium to Group II base oils holds at widest in four months, contrasting with narrowing Europe Group III premium to Group II prices.· Firmer premium curbs attraction for blenders to consume more Group III base oils..· Brazil’s base oils demand for overseas supplies could ease after a surge in US shipments to the country at end-2023..· The rise in shipments coincided with rising domestic supply and lower lube demand in Brazil at end-2023.· Brazil had provided key outlet for surplus US supplies during H2 2023.· Any slowdown in Brazil’s demand for overseas supplies would force US shipments to target other markets instead, and at prices that made the shipments competitive..· Mexico’s demand for base oils from the US could face pressure as lower lube consumption at year-end compounded a rise in surplus supplies from the US.· Surplus of US base oils exports over Mexico’s lube consumption rose in Dec 2023 to widest level in three months..· Surplus remained much lower than in Jan-Sep 2023, suggesting that US base oils exports to Mexico have completed most of their correction to more sustainable levels..· Chile’s January lube/base oil imports hold firm from Dec 2023, extend strong rise since Oct 2023 from year-earlier levels..· Higher imports coincide with expectations of firmer economic growth this year..· Europe’s Group I heavy-grade premium to VGO extends fall, suggesting supply remains sufficient and demand remains muted.· Europe’s Group III base oils price-premium to Group I/Group II prices continues to narrow, moving closer to levels in Q2 2022.· Narrower gap between Group I/II and Group III prices boosts incentive for blenders to consume more Group III base oils.· Germany’s November domestic lube demand falls at its slowest pace in fourteen months as engine oils consumption rises and process oils demand steadies..· Any signs of steadier consumption would add to a sustained recovery in lube demand in Mediterranean markets like Spain and Italy that shows signs of extending into the start of this year.· Such a trend would likely support steady-to-firmer lube consumption in Europe.· Any pick-up in demand could require that blenders adjust their procurement strategy that was partly based on a sustained fall in consumption. .· Nigeria’s base oils demand for overseas supplies could ease after a rebound in shipments to the country that began late last year extended into Feb 2024..· Nigeria’s demand for supplies from the US could hold firmer amid expectations of a further drop in surplus availability from Europe.· A growing reliance on shipments from the US could boost Nigeria’s buying interest in supplies from other sources like Mideast Gulf..· Other African markets like Egypt could also seek more supplies from other regions in the face of tighter surplus availability and less competitive prices for shipments from Europe..Asia base oils demand outlook: Week of Feb 26.Global base oils margins outlook: Week of Feb 26.Global base oils arb outlook: Week of Feb 26.Global base oils cargo flows: Week of Feb 26
· Moves by some US refiners to raise US posted prices coincide with a time of year when domestic demand typically gets a seasonal boost.· Moves to raise posted prices often trigger pick-up in demand as buyers seek to lock in more supplies before price increases take effect.· Moves by some US refiners to raise posted prices instead point to a response to squeezed margins or refinery-specific factors rather than a recent pick-up in domestic demand.· Any pick-up in domestic demand would likely initially impact availability for export and support firmer US export prices.· Fall in US base oils export prices in Feb 2024 point to ongoing availability of surplus supplies.· Any signs of ongoing availability of export cargoes, and any signs of still-cautious domestic demand, could complicate moves to raise posted prices.· Any signs of more widespread posted-price-increases could by contrast complicate buyers’ decision to hold back.· Demand for US export cargoes likely to hold firm amid unusually competitive export prices.· US Group III price premium to Group II base oils holds at widest in four months, contrasting with narrowing Europe Group III premium to Group II prices.· Firmer premium curbs attraction for blenders to consume more Group III base oils..· Brazil’s base oils demand for overseas supplies could ease after a surge in US shipments to the country at end-2023..· The rise in shipments coincided with rising domestic supply and lower lube demand in Brazil at end-2023.· Brazil had provided key outlet for surplus US supplies during H2 2023.· Any slowdown in Brazil’s demand for overseas supplies would force US shipments to target other markets instead, and at prices that made the shipments competitive..· Mexico’s demand for base oils from the US could face pressure as lower lube consumption at year-end compounded a rise in surplus supplies from the US.· Surplus of US base oils exports over Mexico’s lube consumption rose in Dec 2023 to widest level in three months..· Surplus remained much lower than in Jan-Sep 2023, suggesting that US base oils exports to Mexico have completed most of their correction to more sustainable levels..· Chile’s January lube/base oil imports hold firm from Dec 2023, extend strong rise since Oct 2023 from year-earlier levels..· Higher imports coincide with expectations of firmer economic growth this year..· Europe’s Group I heavy-grade premium to VGO extends fall, suggesting supply remains sufficient and demand remains muted.· Europe’s Group III base oils price-premium to Group I/Group II prices continues to narrow, moving closer to levels in Q2 2022.· Narrower gap between Group I/II and Group III prices boosts incentive for blenders to consume more Group III base oils.· Germany’s November domestic lube demand falls at its slowest pace in fourteen months as engine oils consumption rises and process oils demand steadies..· Any signs of steadier consumption would add to a sustained recovery in lube demand in Mediterranean markets like Spain and Italy that shows signs of extending into the start of this year.· Such a trend would likely support steady-to-firmer lube consumption in Europe.· Any pick-up in demand could require that blenders adjust their procurement strategy that was partly based on a sustained fall in consumption. .· Nigeria’s base oils demand for overseas supplies could ease after a rebound in shipments to the country that began late last year extended into Feb 2024..· Nigeria’s demand for supplies from the US could hold firmer amid expectations of a further drop in surplus availability from Europe.· A growing reliance on shipments from the US could boost Nigeria’s buying interest in supplies from other sources like Mideast Gulf..· Other African markets like Egypt could also seek more supplies from other regions in the face of tighter surplus availability and less competitive prices for shipments from Europe..Asia base oils demand outlook: Week of Feb 26.Global base oils margins outlook: Week of Feb 26.Global base oils arb outlook: Week of Feb 26.Global base oils cargo flows: Week of Feb 26
