Global base oils – week of April 10: Price outlook - margins

·       Rising feedstock costs, more balanced supply and firmer demand give refiners in Europe and Asia more leverage to target higher prices.

·        Europe’s Group I/II base oils premium to gasoil stays relatively steady amid firm outright prices and as gasoil struggles to keep pace with higher crude prices.

·        Europe’s Group I premium to gasoil holds close to highest since last September; premium likely to get support from more balanced supply-demand fundamentals.

·        Europe’s Group II premium to gasoil show signs of having bottomed out; signs of more balanced fundamentals provide further support.

·        US producers hold back from more posted price-cuts as rising feedstock prices trim margins.

·        Asia-Pacific Group I/II premium to gasoil edges down, holds close to highest since early August.

·        Asia-Pacific Group I/II premium to gasoil likely to hold firm or rise, with fundamentals firmer than year-earlier levels.

·        China’s domestic Group II light-grade price premium to diesel holds close to highest since late-November.

·        China’s firm base oil premium should incentivize refiners to raise output.

·        China’s low base oils output and plant maintenance work suggests refiners remain cautious even with firmer premium to diesel.

·        India’s retail diesel premium to regional light-grade base oils prices holds steady at levels that coincided with sustained slowdown in very-light grade base oils imports since middle of last year.