· US base oils export price-discount to US domestic prices stays narrower in Q1 2025 vs year-earlier..· Narrower export price-discount points to more manageable supply surplus at end-2024 and early this year, when domestic demand faced seasonal slowdown..· More manageable supply surplus follows firm export volumes through H2 2024 and early this year..· Firm exports reflect surge in shipments to Mexico and Africa, countering fall in supplies to other key markets..· Surge in shipments to Mexico and Africa cuts US reliance on open arbitrage to outlets like India to clear surplus volumes during winter months..· US Group II export prices weaken vs CFR India prices since Sept 2024, but price differential in Q1 2025 stays firmer than year-earlier levels..· India’s imports from US stay lower than usual at end-2024 and early this year, reflecting less attractive arbitrage and lower surplus to clear..· US’ reduced reliance on India curbs impact of any slowdown in that country’s imports from US as planned start-up of new domestic production over coming year boosts its self-sufficiency..· US’ reduced reliance on India contrasts with growing reliance on Mexico and Africa.· Mexico’s logistical proximity and absorption of increasingly large volumes from US adds to its attraction and importance.· Mexico accounts for more than 40% of US’ total exports in 2024, up from 37% share the previous year and less than 25% in 2022..· Mexico’s importance as key outlet for growing share of US exports in turn magnifies impact of any drop in shipments to that market..· Any such drop in shipments could be a repercussion of any change in import taxes between US and Mexico.· Any such drop in shipments to Mexico could force large volume of surplus US supplies to target other markets instead.· Any such move would require export prices that make feasible the arbitrage to those other markets.· Any such move could put pressure on relative strength of US base oils export prices versus US domestic prices at end-2024 and Q1 2025..Global base oils margins outlook: Week of 31 March.Asia base oils demand outlook: Week of 31 March.Asia base oils supply outlook: Week of 31 March
