· US Group II heavy-grade base oil price premium to light grades falls to narrowest in almost two years.· Asia’s Group II heavy-grade price premium to light grades rises to widest in more than two years.· Contrasting price trends reflect different supply-demand fundamentals and create growing arbitrage opportunities.· US Group II heavy-grade premium to light grades narrows more because of strength of outright Group II N100/120 prices than any heavy-grade weakness..· US Group II light-grade prices get sustained support from unexpectedly tight supply since start of Q2 2024.· Supply tightens because of combination of plant maintenance, rise in Group III base oils output, surge in exports in Q1 2024 and stock-building in Q3 2024. .· Asia’s Group II heavy-grade premium to light grades widens more because of strength of outright Group II N500 prices..· Asia’s Group II heavy-grade prices get sustained support from firm marine lube demand, and as buyers switch away from Group I heavy neutrals as its availability tightens..· Sustained demand for Group II heavy grades shows signs of changing typical pattern of widening then narrowing Group II heavy-grade premium to Group I heavy neutrals..· Asia’s Group II heavy-grade premium gets additional support from lower outright prices for light-grade base oils.· Group II light-grade prices face pressure from healthy supply and seasonal slowdown in demand in key outlets like India.· Availability of Group III base oils supplies at competitive prices adds to pressure on Group II light grades..· Weaker fundamentals and lower Group II light-grade prices in Asia contrast with firmer fundamentals and rising Group II light-grade prices in US.· Gap between Asia and US Group II light-grade domestic and especially export prices duly grows in Aug 2024 to widest since Q4 2022..· Increasingly feasible arbitrage to Americas would help to trim Asia’s light-grade supply surplus and to ease US light-grade supply-tightness.· Any such arbitrage shipments would leave Asia’s light-grade supply more balanced before seasonal pick-up in demand and start of plant-maintenance work in the region from end-Q3 2024. · Asia’s Group II heavy-grade premium to light grades could then start to narrow in response to more balanced light-grade supply.· US Group II heavy-grade premium to light grades could then start to widen in response to more plentiful light grade supply..Global base oils margins outlook: Week of 12 Aug.Asia base oils supply outlook: Week of 12 Aug.Base Oil News stories and analysis also available on ICIS platform
