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· Europe’s Group I domestic base oils prices maintain steep premium to other markets like US and Asia.
· Wide premium keeps arbitrage to Europe open, incentivizes overseas suppliers to move more shipments to Europe.
· Open arbitrage reflects Europe’s firm Group I demand and tight supply fundamentals, sustaining need for higher prices to attract additional shipments.
· Open arbitrage to Europe tightens availability of Group I supply for other markets.
· Europe’s higher prices and tight fundamentals also incentivize regional suppliers like Greece and Italy to keep more exports within Europe.
· The moves cut further the volume of Group I base oils available for markets outside the region.
· Europe’s Group I export base oils prices maintain steep premium to other markets like Middle East and India, reflecting the tighter availability for markets outside Europe.
· Price and supply dynamics incentivize overseas buyers to seek other sources of supply and supplier.
· Price and supply dynamics incentivize overseas suppliers to target those buyers with Group I or premium-grade base oils.
· Surge in Russia’s base oils shipments to markets like Turkey and India reflect that dynamic.
· Sustained rise in Asia’s base oils exports to Middle East for a second year point to the region's increasing consumption of premium-grade base oils.
· Ready availability of supply and narrowing gap between Group I and Group II prices boost attraction of consuming more premium-grade base oils in markets like Middle East and India.
· Dynamic suggests Europe’s sustained demand for Group I base oils could speed up moves by buyers in other regions to switch to using more premium-grade base oils.
· Such an outcome, of overseas blenders using larger volumes of lower-priced premium-grade base oils, could complicate the competitiveness of European blenders using large volumes of higher-priced Group I base oils.
