· US base oils demand could ease as refiners’ lower contract prices add to signs of muted end-user consumption and completion of stock-building.· This time a year ago, US refiners raised posted prices in Aug 2023 and Sept 2023.· The price-cut this year contrasts with those moves, takes place in middle of peak Atlantic hurricane period.· Seasonal pick-up in demand in final weeks of third quarter could be more muted as buyers work down stocks and wait for prices to stabilize.· Group II base oils demand could face additional pressure from their increasingly narrow discount to Group III base oils prices.· Overseas demand for US base oils supplies likely to stay more muted as high prices keep the arbitrage shut to markets like India.· High US prices also boost incentive for buyers in Latin America to target supplies from Asia-Pacific..· Prospect of seasonal slowdown in Latin America’s lube demand in final months of 2024 could curb further the buying interest from that region..· Slowdown in lube demand would curb base oils requirements, adding to dip in demand for base oils from US.· Arbitrage shipments from Asia would compound the slowdown in demand for base oils from US and increase importance of closing the arbitrage..· Brazil’s base oils demand for overseas supplies could ease in H2 2024 compared with H2 2023, when plant-maintenance work boosted country’s reliance on imports.· Imports account for more than 71% of Brazil’s supply in H2 2023, up from typical levels of close to 60%..· Imports’ share of supply unlikely to return to that higher level in H2 2024.· Dynamic would curb prospect of repeat of surge in US base oils exports to Brazil that took place in H2 2023.· Open arbitrage to move shipments from Asia to Brazil could further curb requirements for US shipments.· Demand for overseas supplies could still stay higher than usual if domestic consumption extends its rise.· Any such higher-than-usual requirements could sustain buying interest in shipments from Asia if the arbitrage stays open..· Europe’s base oils demand could get boost from seasonal rise in lube demand in month of September from the previous month.· Signs of sufficient base oils supply, and high prices, could incentivize buyers to continue to procure smaller volumes more frequently.· Europe’s demand for Group I base oils shows signs of holding firm even with plentiful supply and competitive prices for premium-grade base oils.· Firm demand cuts availability of Group I base oils for other regions.· Italy’s lube demand rises in July 2024 for first time in three months..· Firmer consumption extends period of uneven demand growth throughout Europe so far this year.· Scant signs of strong or sustained recovery in demand, and sufficient base oils supplies, incentivize region’s blenders to maintain lower stocks.· European blenders’ stock-management faces challenge of seasonal slump in demand in month of August from July, followed by rebound in demand in September from August..· Blenders’ higher stocks would dull the impact of that monthly demand volatility.· Blenders’ lower stocks would magnify the impact of the monthly demand volatility..· Europe’s lube demand shows signs of being weaker than expected in Q2 2024 as Germany’s domestic consumption extends steep slide..· Speed of contraction outpaces slowdown in other markets like Italy and Spain· Trend extends drop in Germany’s share of Europe's lube consumption.· Germany’s weak domestic demand contrasts with surge in country’s lube exports in first five months of 2024.· Rising exports counter impact of shrinking domestic demand, support pick-up in lube production since start of 2024..· Rising lube production supports rise in base oils requirements, despite sliding domestic lube consumption..Asia base oils demand outlook: Week of 2 Sept.Global base oils margins outlook: Week of 2 Sept.Global base oils arb outlook: Week of 2 Sept.Italy’s July lube demand rises.Brazil’s July base oils supply recovers
· US base oils demand could ease as refiners’ lower contract prices add to signs of muted end-user consumption and completion of stock-building.· This time a year ago, US refiners raised posted prices in Aug 2023 and Sept 2023.· The price-cut this year contrasts with those moves, takes place in middle of peak Atlantic hurricane period.· Seasonal pick-up in demand in final weeks of third quarter could be more muted as buyers work down stocks and wait for prices to stabilize.· Group II base oils demand could face additional pressure from their increasingly narrow discount to Group III base oils prices.· Overseas demand for US base oils supplies likely to stay more muted as high prices keep the arbitrage shut to markets like India.· High US prices also boost incentive for buyers in Latin America to target supplies from Asia-Pacific..· Prospect of seasonal slowdown in Latin America’s lube demand in final months of 2024 could curb further the buying interest from that region..· Slowdown in lube demand would curb base oils requirements, adding to dip in demand for base oils from US.· Arbitrage shipments from Asia would compound the slowdown in demand for base oils from US and increase importance of closing the arbitrage..· Brazil’s base oils demand for overseas supplies could ease in H2 2024 compared with H2 2023, when plant-maintenance work boosted country’s reliance on imports.· Imports account for more than 71% of Brazil’s supply in H2 2023, up from typical levels of close to 60%..· Imports’ share of supply unlikely to return to that higher level in H2 2024.· Dynamic would curb prospect of repeat of surge in US base oils exports to Brazil that took place in H2 2023.· Open arbitrage to move shipments from Asia to Brazil could further curb requirements for US shipments.· Demand for overseas supplies could still stay higher than usual if domestic consumption extends its rise.· Any such higher-than-usual requirements could sustain buying interest in shipments from Asia if the arbitrage stays open..· Europe’s base oils demand could get boost from seasonal rise in lube demand in month of September from the previous month.· Signs of sufficient base oils supply, and high prices, could incentivize buyers to continue to procure smaller volumes more frequently.· Europe’s demand for Group I base oils shows signs of holding firm even with plentiful supply and competitive prices for premium-grade base oils.· Firm demand cuts availability of Group I base oils for other regions.· Italy’s lube demand rises in July 2024 for first time in three months..· Firmer consumption extends period of uneven demand growth throughout Europe so far this year.· Scant signs of strong or sustained recovery in demand, and sufficient base oils supplies, incentivize region’s blenders to maintain lower stocks.· European blenders’ stock-management faces challenge of seasonal slump in demand in month of August from July, followed by rebound in demand in September from August..· Blenders’ higher stocks would dull the impact of that monthly demand volatility.· Blenders’ lower stocks would magnify the impact of the monthly demand volatility..· Europe’s lube demand shows signs of being weaker than expected in Q2 2024 as Germany’s domestic consumption extends steep slide..· Speed of contraction outpaces slowdown in other markets like Italy and Spain· Trend extends drop in Germany’s share of Europe's lube consumption.· Germany’s weak domestic demand contrasts with surge in country’s lube exports in first five months of 2024.· Rising exports counter impact of shrinking domestic demand, support pick-up in lube production since start of 2024..· Rising lube production supports rise in base oils requirements, despite sliding domestic lube consumption..Asia base oils demand outlook: Week of 2 Sept.Global base oils margins outlook: Week of 2 Sept.Global base oils arb outlook: Week of 2 Sept.Italy’s July lube demand rises.Brazil’s July base oils supply recovers
