· US base oils demand likely to continue to get support from stock-building as buffer against risk of weather-related disruptions as another major storm targets US Gulf coast region.· US base oils demand could face slowdown once refiners, distributors and blenders have completed stock-building.· Demand for supplies to boost stocks cushions impact of seasonal slowdown in domestic consumption, and of export prices that dampen overseas buying interest.· That trend already played out in May 2024, when lower domestic consumption and exports triggered drop in total demand..· Demand lags supply in May 2024 for first time in five months, providing opportunity to replenish stocks.· Prospect of further slowdown in domestic consumption and more muted overseas demand during Q3 2024 increases reliance on stock-building to sustain supply-demand balance..· Demand from Latin America could also help cushion any slowdown in domestic requirements in US.· Even demand from that region could start to ease in the coming weeks as that market readies for a typical seasonal slowdown in lube demand in Q4 2024..· Latin America's lube demand likely to rise in month of August before slipping in September.· Demand pattern contrasts with trend of weaker August demand and firmer demand in September in US, Europe and Asia.· Prospect of steady demand in Latin America over coming months boosts attraction of securing additional supplies during Q3 2024 as insurance against supply disruptions.· Buyers would then have the time to trim requirements and work down inventories from start of Q4 2024 if any supply disruptions are more muted than planned for..· Brazil’s demand for overseas base oils supplies likely to hold firm after country’s supply lags demand in June 2024 for first time in nine months..· Concern about weather-related supply disruptions in US during Q3 2024 boost incentive for buyers in Brazil to seek additional volumes and build stocks to cover against any such disruptions.· Supply shortfall in June 2024 instead cuts size of buffer against any unexpected disruptions.· Moves to seek additional supplies could be more complicated in Q3 2024 as other buyers in the Americas also move to build stocks, tightening surplus US supply.· Brazil's demand could instead rise for supplies from other markets like Asia.· An increasingly feasible arbitrage from Asia to the Americas adds to the attraction and feasibility of such shipments..· Europe’s demand for Group I base oils could stay firmer than usual for the time of year amid concern about sufficient supply ahead of seasonal pick-up in requirements during final weeks of Q3 2024.· Europe’s demand for premium-grade base oils could stay more muted amid expectations of sufficient supply at that time.· Europe’s Group I base oils prices hold firm relative to VGO, relative to other grades and relative to other regions like UAE/India..· Dynamic points to still-firm demand even as tighter supply and higher prices incentivize blenders to use more premium-grade base oils.· Firm prices relative to other markets sustain incentive for suppliers in markets like Egypt, Saudi Arabia and Turkey to move more supplies to Europe.· Rising flows from those countries to Europe likely to boost demand in markets that those countries previously targeted.· Rise in Europe’s imports of Group I base oils to meet regional demand extends role of distributors that previously focused on imports of Group II and Group III base oils.· Rise in imports increases time between procurement, shipment and delivery of Group I supplies.· Europe’s mixed lube demand growth sustains attraction for blenders to maintain lower stocks and procure smaller volumes more regularly.· Dynamic puts onus on regional distributors to hold sufficient inventories to meet those procurement trends..Asia base oils demand outlook: Week of 5 Aug.Global base oils margins outlook: Week of 5 Aug.Global base oils arb outlook: Week of 5 Aug.Global base oils demand outlook: Week of 5 Aug
· US base oils demand likely to continue to get support from stock-building as buffer against risk of weather-related disruptions as another major storm targets US Gulf coast region.· US base oils demand could face slowdown once refiners, distributors and blenders have completed stock-building.· Demand for supplies to boost stocks cushions impact of seasonal slowdown in domestic consumption, and of export prices that dampen overseas buying interest.· That trend already played out in May 2024, when lower domestic consumption and exports triggered drop in total demand..· Demand lags supply in May 2024 for first time in five months, providing opportunity to replenish stocks.· Prospect of further slowdown in domestic consumption and more muted overseas demand during Q3 2024 increases reliance on stock-building to sustain supply-demand balance..· Demand from Latin America could also help cushion any slowdown in domestic requirements in US.· Even demand from that region could start to ease in the coming weeks as that market readies for a typical seasonal slowdown in lube demand in Q4 2024..· Latin America's lube demand likely to rise in month of August before slipping in September.· Demand pattern contrasts with trend of weaker August demand and firmer demand in September in US, Europe and Asia.· Prospect of steady demand in Latin America over coming months boosts attraction of securing additional supplies during Q3 2024 as insurance against supply disruptions.· Buyers would then have the time to trim requirements and work down inventories from start of Q4 2024 if any supply disruptions are more muted than planned for..· Brazil’s demand for overseas base oils supplies likely to hold firm after country’s supply lags demand in June 2024 for first time in nine months..· Concern about weather-related supply disruptions in US during Q3 2024 boost incentive for buyers in Brazil to seek additional volumes and build stocks to cover against any such disruptions.· Supply shortfall in June 2024 instead cuts size of buffer against any unexpected disruptions.· Moves to seek additional supplies could be more complicated in Q3 2024 as other buyers in the Americas also move to build stocks, tightening surplus US supply.· Brazil's demand could instead rise for supplies from other markets like Asia.· An increasingly feasible arbitrage from Asia to the Americas adds to the attraction and feasibility of such shipments..· Europe’s demand for Group I base oils could stay firmer than usual for the time of year amid concern about sufficient supply ahead of seasonal pick-up in requirements during final weeks of Q3 2024.· Europe’s demand for premium-grade base oils could stay more muted amid expectations of sufficient supply at that time.· Europe’s Group I base oils prices hold firm relative to VGO, relative to other grades and relative to other regions like UAE/India..· Dynamic points to still-firm demand even as tighter supply and higher prices incentivize blenders to use more premium-grade base oils.· Firm prices relative to other markets sustain incentive for suppliers in markets like Egypt, Saudi Arabia and Turkey to move more supplies to Europe.· Rising flows from those countries to Europe likely to boost demand in markets that those countries previously targeted.· Rise in Europe’s imports of Group I base oils to meet regional demand extends role of distributors that previously focused on imports of Group II and Group III base oils.· Rise in imports increases time between procurement, shipment and delivery of Group I supplies.· Europe’s mixed lube demand growth sustains attraction for blenders to maintain lower stocks and procure smaller volumes more regularly.· Dynamic puts onus on regional distributors to hold sufficient inventories to meet those procurement trends..Asia base oils demand outlook: Week of 5 Aug.Global base oils margins outlook: Week of 5 Aug.Global base oils arb outlook: Week of 5 Aug.Global base oils demand outlook: Week of 5 Aug
