· US base oils demand could see earlier-than-usual seasonal slowdown as buyers and distributors prioritize consumption of existing inventories first.· Buyers and distributors’ inventories could be higher than usual after they built up additional stocks as buffer against weather-related supply disruptions.· Those weather-related disruptions have been more muted than expected.· Concern about further downward price-pressure could add to buyers’ incentive to minimize any requirements for additional supplies.· US Group III 4cSt price premium to Group II N100 price stays unusually narrow..· Narrow premium could boost buying interest in Group III base oils, cushioning any slowdown in demand compared with Group II base oils..· Falling US export prices make less attractive the shipment of arbitrage shipments to Latin America from other regions like Asia.· Dynamic could boost Latin America’s demand for US supplies, cushioning impact of likely seasonal slowdown in outright requirements.· Signs of steady-to-firm lube consumption in the region could further limit size of any dip in requirements.· Brazil’s lube demand holds firm in Aug 2024 amid sustained rise in consumption since mid-2023..· Firm lube consumption sustains requirements for higher base oils supply during Q3 2024.· Prospect of seasonal slowdown in lube consumption in Q4 2024 likely to ease pressure on base oils supply to keep pace with demand..· Argentina’s lube demand extends slide for tenth month in Aug 2024, but industrial oil lube demand falls at slowest pace this year..· Signs of improving industrial oils consumption coincide with slump in stocks of the lubricants.· Extension of trend could trigger more sustained pick-up in production of industrial lubricants over coming months to at least replenish depleted stocks.· Ongoing slide in automotive lubricants and high stocks likely to incentivize blenders to continue to cut production of those lubricants.· Dynamic raises prospect of pick-up in demand for base oils to produce industrial oils, further drop in demand for base oils for automotive oils production..· Europe’s base oils demand could face additional slowdown until buyers are confident that a round of price adjustments has ended.· More competitive Group I prices could then support pick-up in demand for the grade.· Signs of healthy availability and weak lube demand could limit any such rise in demand.· Refiners could instead seek to redirect more supplies to overseas markets, especially in view of increasingly strong Group I export prices relative to regional prices.· Europe Group I export prices were firm relative to domestic prices in Q2 2024 especially because of tighter supply-demand fundamentals.· Group I export prices are even firmer vs domestic prices at end-Sept 2024 even with weaker supply-demand fundamentals.· Dynamic could incentivize overseas buyers to hold back in anticipation of adjustment in export prices.· Europe’s Group I base oils exports to markets outside the region already rise in July 2024 from year-earlier levels for first time in six months to six-month high..· Rise in exports follows slump in shipments to non-EU markets during H1 2024, while Group I exports to markets in Europe surge during that time.· Change in dynamics points to rise in surplus supply amid weaker regional demand.· Signs of ongoing contraction in Europe’s lube consumption through summer months compounds seasonal dip in demand, boosting availability of surplus supplies..· Italy’s lube demand falls to three-year low in Aug 2024 as slowdown in Europe’s lube consumption extends through Q3 2024..· Prospect of regional lube demand weakness extending through rest of 2024 could prompt blenders to trim further their already-lower procurement plans.· Prospect of extended regional lube demand weakness could free up additional Group I supplies for markets outside Europe unless base oils output falls.· Recent shipment from Mediterranean region to Nigeria in Sept 2024 points to pick-up in such supplies..· Buyers could trim their procurement of Group II base oils following surge in the product’s premium to Group I base oils..· Buyers could hold back, with wider Group II premium spurring concern that prices could also face an adjustment..· More muted demand and improving supply in US and Europe provide opportunity for buyers in Africa to replenish stocks.· Demand could be firmer after global base oils exports to Africa fall in July 2024 for sixth straight month from year-earlier levels on sustained slowdown in shipments from US.· Slowdown in US shipments contrasts with steadier flows from Europe, highlighting volatility of supplies from US..· Contrast between volatile supplies from US and steadier flows from Europe boosts attraction for buyers to procure more supplies from Europe.· Europe’s shrinking base oils production capacity could complicate such moves.· Dynamic boosts incentive for buyers in Africa to turn instead to shipments from other sources that can ensure stable supplies..Global base oils margins outlook: Week of 30 Sept.Global base oils demand outlook: Week of 30 Sept.Asia base oils demand outlook: Week of 30 Sept.Brazil’s August lube demand holds firm.Argentina’s August lube demand falls.Europe’s July Grp I base oil exports rise
· US base oils demand could see earlier-than-usual seasonal slowdown as buyers and distributors prioritize consumption of existing inventories first.· Buyers and distributors’ inventories could be higher than usual after they built up additional stocks as buffer against weather-related supply disruptions.· Those weather-related disruptions have been more muted than expected.· Concern about further downward price-pressure could add to buyers’ incentive to minimize any requirements for additional supplies.· US Group III 4cSt price premium to Group II N100 price stays unusually narrow..· Narrow premium could boost buying interest in Group III base oils, cushioning any slowdown in demand compared with Group II base oils..· Falling US export prices make less attractive the shipment of arbitrage shipments to Latin America from other regions like Asia.· Dynamic could boost Latin America’s demand for US supplies, cushioning impact of likely seasonal slowdown in outright requirements.· Signs of steady-to-firm lube consumption in the region could further limit size of any dip in requirements.· Brazil’s lube demand holds firm in Aug 2024 amid sustained rise in consumption since mid-2023..· Firm lube consumption sustains requirements for higher base oils supply during Q3 2024.· Prospect of seasonal slowdown in lube consumption in Q4 2024 likely to ease pressure on base oils supply to keep pace with demand..· Argentina’s lube demand extends slide for tenth month in Aug 2024, but industrial oil lube demand falls at slowest pace this year..· Signs of improving industrial oils consumption coincide with slump in stocks of the lubricants.· Extension of trend could trigger more sustained pick-up in production of industrial lubricants over coming months to at least replenish depleted stocks.· Ongoing slide in automotive lubricants and high stocks likely to incentivize blenders to continue to cut production of those lubricants.· Dynamic raises prospect of pick-up in demand for base oils to produce industrial oils, further drop in demand for base oils for automotive oils production..· Europe’s base oils demand could face additional slowdown until buyers are confident that a round of price adjustments has ended.· More competitive Group I prices could then support pick-up in demand for the grade.· Signs of healthy availability and weak lube demand could limit any such rise in demand.· Refiners could instead seek to redirect more supplies to overseas markets, especially in view of increasingly strong Group I export prices relative to regional prices.· Europe Group I export prices were firm relative to domestic prices in Q2 2024 especially because of tighter supply-demand fundamentals.· Group I export prices are even firmer vs domestic prices at end-Sept 2024 even with weaker supply-demand fundamentals.· Dynamic could incentivize overseas buyers to hold back in anticipation of adjustment in export prices.· Europe’s Group I base oils exports to markets outside the region already rise in July 2024 from year-earlier levels for first time in six months to six-month high..· Rise in exports follows slump in shipments to non-EU markets during H1 2024, while Group I exports to markets in Europe surge during that time.· Change in dynamics points to rise in surplus supply amid weaker regional demand.· Signs of ongoing contraction in Europe’s lube consumption through summer months compounds seasonal dip in demand, boosting availability of surplus supplies..· Italy’s lube demand falls to three-year low in Aug 2024 as slowdown in Europe’s lube consumption extends through Q3 2024..· Prospect of regional lube demand weakness extending through rest of 2024 could prompt blenders to trim further their already-lower procurement plans.· Prospect of extended regional lube demand weakness could free up additional Group I supplies for markets outside Europe unless base oils output falls.· Recent shipment from Mediterranean region to Nigeria in Sept 2024 points to pick-up in such supplies..· Buyers could trim their procurement of Group II base oils following surge in the product’s premium to Group I base oils..· Buyers could hold back, with wider Group II premium spurring concern that prices could also face an adjustment..· More muted demand and improving supply in US and Europe provide opportunity for buyers in Africa to replenish stocks.· Demand could be firmer after global base oils exports to Africa fall in July 2024 for sixth straight month from year-earlier levels on sustained slowdown in shipments from US.· Slowdown in US shipments contrasts with steadier flows from Europe, highlighting volatility of supplies from US..· Contrast between volatile supplies from US and steadier flows from Europe boosts attraction for buyers to procure more supplies from Europe.· Europe’s shrinking base oils production capacity could complicate such moves.· Dynamic boosts incentive for buyers in Africa to turn instead to shipments from other sources that can ensure stable supplies..Global base oils margins outlook: Week of 30 Sept.Global base oils demand outlook: Week of 30 Sept.Asia base oils demand outlook: Week of 30 Sept.Brazil’s August lube demand holds firm.Argentina’s August lube demand falls.Europe’s July Grp I base oil exports rise
