· US base oils demand set to fall as blenders focus on clearing finished lube stocks rather than producing additional supplies.· Steady fall in base oils prices adds to attraction of holding back.· Lower crude oil prices likely to add to expectations of further fall in base oils prices.· Demand could get support from signs of smaller-than-expected base oils surplus so far in Q4 2024.· Smaller surplus curbs risk of sharper price adjustment, supporting steadier procurement.· Overseas demand for US supplies likely to start to improve as lower prices make arbitrage more feasible to outlets like India.· Steady flow of Group I/II base oils shipments to markets like Nigeria and India in recent months points to prices that were already at levels that attracted buying interest..· Brazil’s lube demand rises in Sept 2024 for sixth month from year-earlier levels..· Pace of growth slows markedly in Aug-Sep 2024 from 7% growth rate in Jan-July 2024.· Any extension of trend would compound likely seasonal dip in Brazil and especially Latin America’s lube consumption in final months of 2024.· Brazil’s strong lube consumption growth in first seven months of the year previously balanced out demand weakness in other markets like Mexico and Argentina. .· Argentina’s lube demand falls in Sept 2024 for eleventh month, outpaces drop in lube production for second month..· Slower drop in lube production shows signs of trimming base oils stocks..· Extension of any such move would put pressure on base oils demand in short term, before boosting requirements in several months’ time.· Any such pick-up in requirements in several months’ time would likely coincide with time of year when global base oils prices are typically lower because of pressure from surplus availability..· Europe’s base oils demand likely to stay muted amid signs of sufficient supply of all grades, while finished lube demand flatlines at best.· Prospect of seasonal slump in lube consumption in month of December adds to incentive for blenders to maintain low stocks and procure small volumes as and when required.· Muted consumption could curb any boost to buying interest for Group I base oils in response to their more competitive prices vs Group II base oils.· Overseas demand for Europe base oils likely to stay muted even with recent drop in export prices..· Europe prices remain at levels that still make arbitrage hard to work, with buyers focusing on shipments to overseas markets from other sources like the US..· Europe’s domestic Group II heavy price rises relative to Group II light-grade price and relative to Group I heavy grades..· Firmer Group II heavy-grade premium incentivizes blenders to use Group I heavy grades instead.· Ongoing strength of Group II heavy-grade premium points to supply-demand fundamentals that are firm enough for now to outweigh incentive to switch to other grades..· Europe’s Group III base oils prices stay firm relative to prices in Asia and especially US even as outright prices fall..· Trend points to firmer supply-demand fundamentals relative to those other markets.· Trend sustains incentive for overseas refiners to move more Group III shipments to Europe.· Europe’s Group III base oils imports from Middle East exceed volumes bound for US and Asia in Aug 2024, reflecting that dynamic..· Rise in shipments coincides with persistent fall in Europe’s lube demand.· Dynamic raises prospect of demand lagging supply, triggering growing surplus..Asia base oils demand outlook: Week of 28 Oct.Global base oils margins outlook: Week of 28 Oct.Global base oils arb outlook: Week of 28 Oct.Global base oils demand outlook: Week of 28 Oct.Global premium-grade imports from Middle East rise in Aug.Brazil’s September lube demand rises.Argentina's Sept lube demand falls
