· US base oils demand could weaken in face of widespread market volatility and slumping crude prices.· Any slowdown in demand would be at a time of year when consumption typically gets a seasonal boost. · More muted demand would cushion impact of round of base oils plant maintenance work.· More muted demand would curb refiners’ leverage to target firmer margins.· More muted demand instead puts pressure on refiners to respond more rapidly to any sustained drop in crude oil prices.· Buyers’ expectations of such price adjustments could add to slowdown in demand.· More muted domestic demand would put pressure on refiners to sustain firm export volumes to limit any build-up of surplus supplies.· Pressure to sustain firm export volumes keeps pressure on US export prices.· US Group II export prices maintain unusually steep discount to ex-tank Singapore prices..· Steepening discount at start of Q2 2025 contrasts with narrowing US Group II export price discount to ex-tank Singapore prices from end-Q1 2024..· US base oils imports as share of domestic demand continues to rise in Jan 2025..· Trend points to rising domestic Group III base oils consumption.· Rising Group III base oils consumption, combined with US’ sliding total base oils/lube consumption, compounds downward pressure on demand for other base oils grades.· Dynamic likely to sustain need to maintain high base oils exports even if domestic demand were firmer.· Need to maintain high base oils exports keeps pressure on US export prices to hold at levels that sustain regular arbitrage shipments.· Need to maintain high base oils exports increases importance of outlets like Mexico to absorb large portion of those shipments.· Any slowdown in Mexico’s demand for US base oils would raise prospect of US refiners facing choice of adjusting output or adjusting export destinations..· Latin America’s base oils demand could face pressure from concern about slower-than-expected economic activity.· Concern about reliance on US for most of its base oils imports could prompt region’s buyers to seek to diversify their supply sources.· Any such moves could add to slowdown in demand for US supplies.· Uncertainty about demand could incentivize blenders to maintain lower stocks and to top up supplies more frequently.· Argentina’s lube demand edges up in Feb 2025 for third time in four months..· Recovery in demand should incentivize blenders to hold larger stocks.· Concern about economic growth outlook could instead sustain attraction of holding lower inventories..· Europe’s base oils demand could turn more cautious in response to market volatility.· Buyers could seek to keep stocks at lower levels to limit exposure to any abrupt change in end-user demand or base oils trade flows.· Buyers would need to balance those concerns with need to maintain sufficient stocks to cover seasonal pick-up in demand and any boost from recent signs of improving economic activity in the region.· Any improvement in lube consumption would follow signs of steadier demand throughout the region late last year and early this year..· France’s lube demand edges lower in Jan 2025, reversing rise in consumption in Dec 2024..· Trend still adds to signs of Europe’s lube demand contraction bottoming out..· Europe’s Group I base oils prices strengthen vs Group II prices to firmest in more than four months..· Narrower Group I price-discount to Group II prices points to still-firm buying interest in Group I base oils even with tighter supply and increasingly stringent lube specification requirements. .· Europe’s limited surplus base oils supply and high prices relative to other markets likely to curb overseas demand for region’s base oils.· Any moves by overseas buyers to seek to diversify their supply sources could conversely boost buying interest in markets like Latin America..Asia base oils demand outlook: Week of 7 April.US’ January base oils supply rises.Global base oils arb outlook: Week of 7 April.Global base oils margins outlook: Week of 7 April
· US base oils demand could weaken in face of widespread market volatility and slumping crude prices.· Any slowdown in demand would be at a time of year when consumption typically gets a seasonal boost. · More muted demand would cushion impact of round of base oils plant maintenance work.· More muted demand would curb refiners’ leverage to target firmer margins.· More muted demand instead puts pressure on refiners to respond more rapidly to any sustained drop in crude oil prices.· Buyers’ expectations of such price adjustments could add to slowdown in demand.· More muted domestic demand would put pressure on refiners to sustain firm export volumes to limit any build-up of surplus supplies.· Pressure to sustain firm export volumes keeps pressure on US export prices.· US Group II export prices maintain unusually steep discount to ex-tank Singapore prices..· Steepening discount at start of Q2 2025 contrasts with narrowing US Group II export price discount to ex-tank Singapore prices from end-Q1 2024..· US base oils imports as share of domestic demand continues to rise in Jan 2025..· Trend points to rising domestic Group III base oils consumption.· Rising Group III base oils consumption, combined with US’ sliding total base oils/lube consumption, compounds downward pressure on demand for other base oils grades.· Dynamic likely to sustain need to maintain high base oils exports even if domestic demand were firmer.· Need to maintain high base oils exports keeps pressure on US export prices to hold at levels that sustain regular arbitrage shipments.· Need to maintain high base oils exports increases importance of outlets like Mexico to absorb large portion of those shipments.· Any slowdown in Mexico’s demand for US base oils would raise prospect of US refiners facing choice of adjusting output or adjusting export destinations..· Latin America’s base oils demand could face pressure from concern about slower-than-expected economic activity.· Concern about reliance on US for most of its base oils imports could prompt region’s buyers to seek to diversify their supply sources.· Any such moves could add to slowdown in demand for US supplies.· Uncertainty about demand could incentivize blenders to maintain lower stocks and to top up supplies more frequently.· Argentina’s lube demand edges up in Feb 2025 for third time in four months..· Recovery in demand should incentivize blenders to hold larger stocks.· Concern about economic growth outlook could instead sustain attraction of holding lower inventories..· Europe’s base oils demand could turn more cautious in response to market volatility.· Buyers could seek to keep stocks at lower levels to limit exposure to any abrupt change in end-user demand or base oils trade flows.· Buyers would need to balance those concerns with need to maintain sufficient stocks to cover seasonal pick-up in demand and any boost from recent signs of improving economic activity in the region.· Any improvement in lube consumption would follow signs of steadier demand throughout the region late last year and early this year..· France’s lube demand edges lower in Jan 2025, reversing rise in consumption in Dec 2024..· Trend still adds to signs of Europe’s lube demand contraction bottoming out..· Europe’s Group I base oils prices strengthen vs Group II prices to firmest in more than four months..· Narrower Group I price-discount to Group II prices points to still-firm buying interest in Group I base oils even with tighter supply and increasingly stringent lube specification requirements. .· Europe’s limited surplus base oils supply and high prices relative to other markets likely to curb overseas demand for region’s base oils.· Any moves by overseas buyers to seek to diversify their supply sources could conversely boost buying interest in markets like Latin America..Asia base oils demand outlook: Week of 7 April.US’ January base oils supply rises.Global base oils arb outlook: Week of 7 April.Global base oils margins outlook: Week of 7 April
