· US base oils demand could get support from stock-building ahead of Atlantic hurricane season.· Slow end-user consumption, expectations of improving availability of supply and of steady-to-lower prices could curb extent of any such stock-building.· US refiners’ regular exports of surplus shipments to overseas markets could limit volumes available to cover for any unexpected supply disruptions over coming months.· US base oils stocks already fall to five-month low at end-Q1 2025, even ahead of round of plant maintenance and seasonal pick-up in demand in early Q2 2025..· Risk of supply disruptions set to rise over coming months during Atlantic hurricane season.· Concern about weather-related supply disruptions and about availability of domestic supply could prompt blenders to seek additional stocks to cover for such a scenario..· Overseas demand for US supplies in markets like India and Middle East could be more muted because of seasonal slowdown in consumption and prospect of rise in surplus supply from Asia.· US Group II heavy-grade export price-discount to CFR India price stays wider than usual for the time of year..· Price-discount could face pressure to widen further to factor in possibility of pressure on India prices from weaker supply-demand fundamentals during time between procurement and delivery of any US shipments..· Latin America’s base oils demand could be more mixed as weak lube consumption incentivizes blenders to keep low stocks.· Low stocks leave buyers more exposed to risk of tighter-than-expected supply.· Any such scenario is unlikely for now as pick-up in shipments from US to markets like Brazil helps to replenish inventories in early-Q2 2025..· Brazil’s base oils demand could focus more on supplies from local or regional sources as falling lube consumption incentivizes blenders to hold lower stocks.· Lube demand falls in April 2025 for second month, while automobile sales fall for first time in thirteen months..· Lower demand leaves stocks lasting longer, curbs impact of plant maintenance in US at start of Q2 2025.· Lower demand could anyway curb buying interest in base oils shipments from the US and instead boost demand for supplies from Argentina.· Argentina’s ability to respond to any such buying interest could be complicated by strong demand in other markets like Europe and West Africa, and by its own lower stocks.· Another cargo of Group I heavy neutrals is set to load from Argentina in early-June 2025..· Argentina’s demand for overseas base oils supplies could rise to replenish falling stocks.· Argentina’s high exports in Jan-April 2025 tap global market’s tight supply and firm prices for Group I base oils.· Any moves to maintain high export volumes would require pick-up in base oils imports to maintain balanced fundamentals.· Any such pick-up in demand for overseas supplies would follow slump in imports in Jan-April 2025..· US would likely be key beneficiary of any such pick-up in demand for overseas supplies..· Europe’s base oils demand could get support from blenders’ need to replenish low stocks more frequently.· Signs of firmer lube demand at least at start of Q2 2025 speed up consumption of blenders’ low stocks.· Uncertainty about sustainability of recovery in lube demand incentivizes blenders to maintain strategy of keeping low stocks.· Strategy of maintaining low stocks magnifies impact of any further pick-up in consumption.· Base oils plant maintenance in Europe during Q2 2025 tightens surplus supply, further magnifying impact of maintaining low stocks.· Italy’s lube consumption rises in April 2025 for second month..· Demand rises mostly because of strong PCMO consumption.· Reliance on strong PCMO consumption leaves total lube demand exposed to slowdown if engine oils demand falls..· Europe Group II light-grade base oils price discount to Group III 4cst (low) price slips to widest level this year, from premium to Group III base oils as recently as late-March 2025..· Widening Group II light-grade price-discount and healthy availability of supply could boost buying interest in Group II supplies at expense of Group III base oils..· Europe Group II heavy-grade premium to Group I SN 500 rises to highest level in almost seven months..· Widening premium boosts attraction of using more Group I supplies instead.· Widening premium could instead reflect tighter availability of Group I base oils, boosting demand for Group II heavy grades as an alternative..Argentina’s April base oils/lube demand mixed.Brazil’s April lube demand falls.Italy’s April lube demand rises.Global base oils margins outlook: Week of 2 June.Asia base oils demand outlook: Week of 2 June
