· US domestic base oils demand likely to weaken further from late-Nov 2024 and stay muted well into Q1 2025.· Seasonal slowdown in demand puts additional pressure on overseas demand holding firm and absorbing more US supplies.· Falling US export prices boosts prospect of such a pick-up in overseas demand.· Dynamic highlights importance of exports as key driver of US demand over coming months and in recent months.· US exports account for 63% of total US demand in Aug 2024..· Exports’ increasingly large share of demand counters weakness of domestic consumption.· Exports’ large share of demand increases importance of overseas shipments staying higher, especially if US refiners maintain steady-to-higher base oils output.· Seasonal slowdown in demand in key overseas markets adds to challenge of sustaining high exports.· Seasonal slowdown in demand increases importance of export prices that are more competitive than prices in other markets.· Sustained drop in US export prices boosts prospect of such a scenario.· Sustained drop in US export prices at faster pace than FOB NE Asia prices boosts feasibility of arbitrage shipments to outlets like India..· Steady flow of shipments move from US to markets like West Africa, India and Pakistan in July-Oct 2024.· Flow of shipments from US to those markets shows signs of slowing in recent weeks even with drop in US export prices.· Latin America’s base oils demand likely to stay more muted for now as signs of weaker lube consumption coincide with seasonal slowdown.· Signs of sufficient base oils supply, and sliding base oils prices, add to blenders’ incentive to hold back.· Demand for US supplies could revive earlier than demand for shipments from other markets amid less feasible arbitrage from other markets..· Europe’s base oils demand likely to fall further as blenders prepare for sharp seasonal dip in consumption in month of December.· Sustained fall in region’s lube demand and signs of healthy availability of base oils supply incentivize blenders to cut stocks and procure top-up volumes as and when required.· Italy’s lube demand falls in Sept 2024 for fourth time in five months..· Europe’s lube demand likely to follow similar trend, with contraction likely to extend into Q4 2024.· Europe’s shrinking lube demand raises prospect of region’s base oils supply surplus staying larger without a marked rise in net exports or drop in output..· Germany’s domestic lube demand extends sharp fall in Aug 2024 on slumping engine oils consumption..· Germany’s total lube demand, or domestic consumption and exports combined, hold steady in Aug 2024.· Dynamic reflects recovery in lube exports, supports firm lube production..· Recovery in lube exports likely partly reflects stronger consumption in other European markets.· Recovery in lube exports could also reflect lube supplies from Germany accounting for larger market share in those other markets.· Any sustained pick-up in Europe’s lube consumption likely to be difficult without a recovery in Germany’s domestic lube consumption..· Europe’s base oils and lube demand, or domestic consumption and exports combined, falls to multi-year low for month of August, highlighting pressure of Germany’s sliding consumption..· Shrinking demand raises prospect of larger supply-overhang in Q3 2024.· Weak demand and larger surplus compounds slowdown in buying interest, curbs for longer buyers’ needs to replenish stocks.· Larger surplus gives buyers flexibility to procure supplies as and when required..Asia base oils demand outlook: Week of 4 Nov.Global base oils arb outlook: Week of 4 Nov.US’ August base oils/lube demand rises.Italy’s September lube demand falls.Germany’s August lube demand falls
