· US base oils demand likely to stay lower amid signs of healthy availability of supply.· Healthy availability of supply, buyers’ sufficient stocks and seasonal slowdown in consumption incentivize buyers to hold back.· Ongoing fall in US base oils export prices adds to signs of weaker domestic demand.· US export prices fall in recent weeks even after slump in US base oils stocks during Q2 2025..· Stocks fall to multi-year low in May 2025 as surge in domestic demand counters rise in base oils output.· US demand duly outpaces supply in May 2025 for fourth straight month..· Fall in US export prices in recent weeks suggests rise in demand in May 2025 was temporary.· Fall in US export prices points to sufficiently weak domestic demand to trigger rapid rise in surplus supplies.· Fall in US export prices and their widening discount to domestic prices could boost expectations of adjustment in domestic prices, adding to buyers' preference to hold back..· Fall in US export prices supports stronger demand in overseas markets like India and Middle East.· Those markets may need to absorb additional volumes if buying interest slows in Latin America.· Argentina’s lube demand falls in June 2025 for fourth month from year-earlier levels.· Argentina’s lube output falls in June 2025 for seventh month from year-earlier levels..· Shrinking demand/output adds to more mixed signals of state of Argentina’s economic recovery.· Sustained contraction incentivizes blenders to trim inventories of finished lubricants and base oils.· Argentina’s base oils imports almost pause in June 2025, adding to sharp slump in shipments in H1 2025..· Sustained fall in Argentina’s imports forces US suppliers to instead target other markets in South America.· Any slowdown in demand in those other markets could compound pressure on US suppliers and force pick-up in spot shipments to more distant outlets like Africa and India..· Europe’s base oils demand could start to get support from seasonal recovery in lube consumption in Sept 2025.· Expectations of sufficient base oils supplies and steady-to-weak lube consumption could incentivize blenders to continue to maintain low stocks.· Even so, size of rise in lube demand in month of September from August, after slump in demand in August from July, could create procurement and inventory-management challenges.· Signs of steadier lube consumption in recent months could add to blenders’ comfort with holding more inventories.· Italy’s lube demand rises in June 2025 for third time in four months.· Rising lube demand coincides with improvement in Italy's manufacturing confidence index that extends into July 2025. .· Correlation between Italy's lube demand growth and manufacturing confidence index raises prospect of further pick-up in lube consumption in July 2025..· Any rise in surplus Group I supplies in Europe would boost importance of pick-up in overseas demand to absorb those surplus volumes.· Arbitrage from Europe to markets like India and Middle East stays shut even with recent drop in Europe Group I light-grade export-prices..· Arbitrage stays shut despite firmer demand for Group I base oils in those overseas markets.· Closed arbitrage suggests Europe’s Group I supply remains relatively balanced for now.· Closed arbitrage conversely speeds up any rise in surplus volumes..· Europe’s Group II base oils price-premium to Group I base oils continues to edge lower from recent elevated levels..· Higher Group II price-premium in Q2 2025 coincided with seasonally-firmer lube demand and Group I and Group III plant-maintenance work, boosting requirement for alternative supplies.· Lower Group II price-premium in recent weeks coincides with seasonal slowdown in lube demand and completion of Group I and Group III plant-maintenance work.· Dynamic could suggest Group II demand and price-differentials rose because of lower availability of other grades.· Improving availability of other grades could continue to reverse that dynamic.· Overseas demand for Europe’s Group II base oils in markets like southeast Asia could also start to face pressure following completion of plant-maintenance in Asia and with imminent start-up of new capacity in that region..Asia base oils demand outlook: Week of 4 August.US’ May base oils stocks fall.Argentina’s June lube demand falls.Italy’s June lube demand rises.UK’s May base oils output holds firm.Global base oils margins outlook: Week of 4 August.Base Oil News stories and analyses also available on the ICIS platform
