· Several US refiners raise base oils posted prices in 2H Feb 2024.· Market signals and change in supply-demand fundamentals typically raise expectations of this kind of posted-price adjustment well before the price-adjustments take place.· There were fewer such signals this time.· Posted-price adjustments like this typically trigger wave of similar moves by other refiners.· Such moves by other refiners have yet to materialize this time.· Rise in posted prices in 2H Feb 2024 coincides with time of year when US' domestic demand typically starts to revive after lull in consumption during winter months.· Trend typically triggers rise in domestic spot prices relative to refiners’ posted prices.· Strength of any revival in domestic demand so far remains insufficient to trigger rise in domestic spot prices.· Discount of US Group II spot prices to posted prices stays unusually wide, with little sign of narrowing so far..· A rise in posted prices and usual trend of seasonal pick-up in demand typically coincide with or raise prospect of tighter base oils supply in US domestic market.· US export prices typically strengthen relative to domestic spot prices when surplus supply tightens.· US export price-discount to domestic spot prices stays unusually wide during Feb 2024..· Unusually wide discount points to ongoing availability of surplus volumes that refiners seek to remove from domestic market..· US export prices typically strengthen relative to prices in other regions when sellers face less urgency to keep arbitrage open to clear surplus shipments.· US Group II export prices maintain discount to CFR India prices, and unusually steep discount to domestic Europe prices..· Wide discount coincides with signs of ongoing availability of surplus supplies for export over coming weeks..· Premium of US light-grade domestic prices to feedstock prices falls in early 2024 to narrowest in almost two years.· Posted price-premium to feedstock prices falls to lowest since Q3 2023..· Lower price premium incentivizes refiners to cut output when supply-demand fundamentals are weak, or to raise prices when supply-demand fundamentals are strong, in order to support firmer margins.· Moves to raise posted prices suggest current supply-demand fundamentals are steady-to-firm.· Current supply-demand fundamentals in US coincide with signs of ongoing surplus availability, a wide gap between domestic spot and posted prices, and an open arbitrage to overseas markets..Global base oils margins outlook: Week of March 4
· Several US refiners raise base oils posted prices in 2H Feb 2024.· Market signals and change in supply-demand fundamentals typically raise expectations of this kind of posted-price adjustment well before the price-adjustments take place.· There were fewer such signals this time.· Posted-price adjustments like this typically trigger wave of similar moves by other refiners.· Such moves by other refiners have yet to materialize this time.· Rise in posted prices in 2H Feb 2024 coincides with time of year when US' domestic demand typically starts to revive after lull in consumption during winter months.· Trend typically triggers rise in domestic spot prices relative to refiners’ posted prices.· Strength of any revival in domestic demand so far remains insufficient to trigger rise in domestic spot prices.· Discount of US Group II spot prices to posted prices stays unusually wide, with little sign of narrowing so far..· A rise in posted prices and usual trend of seasonal pick-up in demand typically coincide with or raise prospect of tighter base oils supply in US domestic market.· US export prices typically strengthen relative to domestic spot prices when surplus supply tightens.· US export price-discount to domestic spot prices stays unusually wide during Feb 2024..· Unusually wide discount points to ongoing availability of surplus volumes that refiners seek to remove from domestic market..· US export prices typically strengthen relative to prices in other regions when sellers face less urgency to keep arbitrage open to clear surplus shipments.· US Group II export prices maintain discount to CFR India prices, and unusually steep discount to domestic Europe prices..· Wide discount coincides with signs of ongoing availability of surplus supplies for export over coming weeks..· Premium of US light-grade domestic prices to feedstock prices falls in early 2024 to narrowest in almost two years.· Posted price-premium to feedstock prices falls to lowest since Q3 2023..· Lower price premium incentivizes refiners to cut output when supply-demand fundamentals are weak, or to raise prices when supply-demand fundamentals are strong, in order to support firmer margins.· Moves to raise posted prices suggest current supply-demand fundamentals are steady-to-firm.· Current supply-demand fundamentals in US coincide with signs of ongoing surplus availability, a wide gap between domestic spot and posted prices, and an open arbitrage to overseas markets..Global base oils margins outlook: Week of March 4
