Global base oils margins outlook: Week of March 25

·        Europe export and Asia base oils prices hold firm or rise vs competing/feedstock prices; US export and domestic Europe price premiums face ongoing pressure.

·        Trends curb incentive for refiners to raise output.

·        Fob Asia base oils prices hold firm versus regional gasoil prices, incentivizing refiners to maintain or raise output.

·        Fob Asia Group II heavy-grade premium to gasoil extends rise to four-month high, widening sharply its premium to Group II light grades.

·        Rising premium, and widening premium to light grades, incentivizes refiners to boost heavy-grade output where possible.

·        Group II base oils premium to gasoil remains far below year-earlier levels, lowering prospect of sharp pick-up in supplies.

·        China’s domestic Group II light-grade premium to Shandong diesel prices rises for first time in four weeks, stays far below year-earlier levels.

·        Lower premium curbs incentive for domestic refiners to maintain or raise base oils output.

·        CFR India Group II N70 premium to regional gasoil prices hold steady at levels that provide sufficient incentive for refiners to maintain output and for buyers to sustain steady demand for the product.

·        Europe’s Group I export price premium to VGO rises; domestic price premium to VGO falls.

·        Firmer export price premium to VGO could incentivize refiners to maintain or raise Group I base oils output.

·        But export price premium to VGO remains well below year-earlier levels.

·        Europe Group II light-grade price premium to VGO falls to lowest since Oct 2023, holds in relatively narrow range over past year.

·        Group III 4cSt (low) premium to VGO extends fall to lowest since Q1 2022, curbing incentive for refiners to produce the premium-grade base oils.

·        US Group II export prices maintain discount to heating oil prices.

·        US Group II export light-grade prices barely maintain premium to VGO.

·        Unusually weak export prices vs VGO incentivize refiners to cut production.

·        US Group II domestic prices extend fall vs VGO but hold relatively firm vs historic levels.

·        US Group II posted prices hold steady vs VGO, widen their premium to domestic spot prices.

·        Steadier posted prices vs VGO, firm prices vs domestic prices and even firmer prices vs export prices curb incentive for refiners to cut production.