· US domestic base oils demand could get support from signs of more balanced supply in short term.· US base oils demand could get further support from more limited alternative supply sources outside the US market in the short-term.· Arbitrage to move supplies from Asia to Americas stays hard to work even as US export prices rise.· Slowdown in US base oils imports in recent months adds to buyers’ reliance on domestic producers to cover requirements.· More balanced supply-demand fundamentals curb prospect of any immediate or sharp price adjustment, boosting buyers’ comfort with replenishing stocks.· Forecasts of unusually active Atlantic hurricane season could boost buyers’ incentive to build larger stocks as hedge against supply disruptions.· Strong and ongoing rebound in US base oils prices relative to feedstock/diesel and relative to prices in overseas markets could, conversely, sustain buyers’ preference to manage stocks carefully.· Expectations that supply remains sufficient and uncertainty about strength of demand likely to continue to incentivize buyers to maintain lean inventories and to procure supplies more frequently. · More muted demand for US supplies in overseas outlets like India highlight the elasticity of buying interest in those markets and the need for US prices to be more competitive if surplus supply starts to build.· Demand in Latin American markets likely to stay more mixed, depending on strength of US base oil prices and strength of finished lube consumption in those regional markets.· Mexico’s demand for additional volumes of US base oils and lubricants could stay more muted while US base oil prices stay at a steep premium to heating oil/VGO prices.. · Brazil’s April lube demand rebounds after slowdown in March 2024..· Rise in lube demand from March 2024 contrasts with typical slowdown in consumption in month of April from March.· Change in seasonal patterns mirrors similar trend in Europe, complicating blenders’ procurement and production plans.· Rise in Brazil's lube demand and prospect of lower base oils supply in April 2024 would speed up consumption of base oils supply surplus carried over from Q1 2024.· Brazil’s typical lube demand trends could face further change in response to economic damage and inflationary impact of recent floods in Brazil’s state of Rio Grande do Sul..· Europe’s blenders face growing incentive to use alternative grades in place of Group I base oils as tighter-than-expected supply highlights risk of uncertainty of availability of Group I base oils.· Signs of healthy availability of premium-grade supplies give blenders the option of maintaining lower inventories amid mixed signals about state of end-user demand.· Europe’s Group III base oils prices maintain steep premium to US prices, and steeper premium to FOB Asia prices.· Price premium points to firmer buying interest and raises prospect of more extended pick-up in Group III base oils shipments from Middle East to Europe during Q2 2024.· Europe’s Group III base oils imports from Middle East already rebound more strongly in March 2024 compared with shipments bound for US and Asia..· France’s March lube demand resumes fall after signs of improving consumption in first two months of 2024..· Simultaneous fall in lube demand in France, Italy and Spain likely cuts Europe’s total lube consumption in March 2024.· Unusual fall in lube demand in month of March from February compounds difficulty for blenders and base oils distributors to plan appropriately, boosts attraction of maintaining low stocks..· South Korea’s April base oils exports to UAE fall from unusually high levels in Feb 2024 and March 2024..· Demand from UAE could stay lower as market absorbs swathe of supplies that moved to the region in recent months.· A slowdown in demand would leave suppliers like South Korea looking for other outlets to clear surplus supplies..Asia base oils demand outlook: Week of 27 May.Global base oils arb outlook: Week of 27 May.Global base oils margins outlook: Week of 27 May
· US domestic base oils demand could get support from signs of more balanced supply in short term.· US base oils demand could get further support from more limited alternative supply sources outside the US market in the short-term.· Arbitrage to move supplies from Asia to Americas stays hard to work even as US export prices rise.· Slowdown in US base oils imports in recent months adds to buyers’ reliance on domestic producers to cover requirements.· More balanced supply-demand fundamentals curb prospect of any immediate or sharp price adjustment, boosting buyers’ comfort with replenishing stocks.· Forecasts of unusually active Atlantic hurricane season could boost buyers’ incentive to build larger stocks as hedge against supply disruptions.· Strong and ongoing rebound in US base oils prices relative to feedstock/diesel and relative to prices in overseas markets could, conversely, sustain buyers’ preference to manage stocks carefully.· Expectations that supply remains sufficient and uncertainty about strength of demand likely to continue to incentivize buyers to maintain lean inventories and to procure supplies more frequently. · More muted demand for US supplies in overseas outlets like India highlight the elasticity of buying interest in those markets and the need for US prices to be more competitive if surplus supply starts to build.· Demand in Latin American markets likely to stay more mixed, depending on strength of US base oil prices and strength of finished lube consumption in those regional markets.· Mexico’s demand for additional volumes of US base oils and lubricants could stay more muted while US base oil prices stay at a steep premium to heating oil/VGO prices.. · Brazil’s April lube demand rebounds after slowdown in March 2024..· Rise in lube demand from March 2024 contrasts with typical slowdown in consumption in month of April from March.· Change in seasonal patterns mirrors similar trend in Europe, complicating blenders’ procurement and production plans.· Rise in Brazil's lube demand and prospect of lower base oils supply in April 2024 would speed up consumption of base oils supply surplus carried over from Q1 2024.· Brazil’s typical lube demand trends could face further change in response to economic damage and inflationary impact of recent floods in Brazil’s state of Rio Grande do Sul..· Europe’s blenders face growing incentive to use alternative grades in place of Group I base oils as tighter-than-expected supply highlights risk of uncertainty of availability of Group I base oils.· Signs of healthy availability of premium-grade supplies give blenders the option of maintaining lower inventories amid mixed signals about state of end-user demand.· Europe’s Group III base oils prices maintain steep premium to US prices, and steeper premium to FOB Asia prices.· Price premium points to firmer buying interest and raises prospect of more extended pick-up in Group III base oils shipments from Middle East to Europe during Q2 2024.· Europe’s Group III base oils imports from Middle East already rebound more strongly in March 2024 compared with shipments bound for US and Asia..· France’s March lube demand resumes fall after signs of improving consumption in first two months of 2024..· Simultaneous fall in lube demand in France, Italy and Spain likely cuts Europe’s total lube consumption in March 2024.· Unusual fall in lube demand in month of March from February compounds difficulty for blenders and base oils distributors to plan appropriately, boosts attraction of maintaining low stocks..· South Korea’s April base oils exports to UAE fall from unusually high levels in Feb 2024 and March 2024..· Demand from UAE could stay lower as market absorbs swathe of supplies that moved to the region in recent months.· A slowdown in demand would leave suppliers like South Korea looking for other outlets to clear surplus supplies..Asia base oils demand outlook: Week of 27 May.Global base oils arb outlook: Week of 27 May.Global base oils margins outlook: Week of 27 May
