· US/Asia Group II price discount to European prices stay wide even as Europe prices fall.· But drop in Europe’s Group II prices could deter arbitrage shipments on concern prices could dip further before shipments reach Europe.· Any slowdown in arbitrage shipments would lower prospect of build-up of surplus supplies in Europe during Q3 2023.· Europe Group III base oils prices stay firm versus Europe/Asia prices, boosting attraction of moving surplus volumes to that market.· Asia’s Group I price discount to Europe prices widens further.· Trend boosts attraction of moving Asia shipments to markets that Europe arbitrage shipments target, such as India and Mideast Gulf.· Trend suggests Europe’s Group I supply is tight enough to not need to have arbitrage open to clear any surplus.· Arbitrage to move surplus Asia Group II cargoes to US/Latin America increasingly hard to work amid more competitive US prices.· More limited arbitrage opportunities to Americas likely to push Asia refiners to target alternative markets instead.· The move may be more difficult as US suppliers target similar alternative markets like India.· Asia Group I bright stock discount to Europe/US prices stays wide – providing more options to clear surplus supplies of that product.· Asia Group II prices stay firm relative to domestic Chinese prices, curbing attraction of moving more supplies to that market.· Asia Group I bright stock discount to domestic Chinese prices stays too narrow to make arbitrage workable unless fob Asia prices fall further or Chinese prices rise.· Trend points to weak Chinese demand, raises prospect of more surplus Asia-Pacific supplies targeting other markets..Global base oils - week of June 5: Demand outlook
· US/Asia Group II price discount to European prices stay wide even as Europe prices fall.· But drop in Europe’s Group II prices could deter arbitrage shipments on concern prices could dip further before shipments reach Europe.· Any slowdown in arbitrage shipments would lower prospect of build-up of surplus supplies in Europe during Q3 2023.· Europe Group III base oils prices stay firm versus Europe/Asia prices, boosting attraction of moving surplus volumes to that market.· Asia’s Group I price discount to Europe prices widens further.· Trend boosts attraction of moving Asia shipments to markets that Europe arbitrage shipments target, such as India and Mideast Gulf.· Trend suggests Europe’s Group I supply is tight enough to not need to have arbitrage open to clear any surplus.· Arbitrage to move surplus Asia Group II cargoes to US/Latin America increasingly hard to work amid more competitive US prices.· More limited arbitrage opportunities to Americas likely to push Asia refiners to target alternative markets instead.· The move may be more difficult as US suppliers target similar alternative markets like India.· Asia Group I bright stock discount to Europe/US prices stays wide – providing more options to clear surplus supplies of that product.· Asia Group II prices stay firm relative to domestic Chinese prices, curbing attraction of moving more supplies to that market.· Asia Group I bright stock discount to domestic Chinese prices stays too narrow to make arbitrage workable unless fob Asia prices fall further or Chinese prices rise.· Trend points to weak Chinese demand, raises prospect of more surplus Asia-Pacific supplies targeting other markets..Global base oils - week of June 5: Demand outlook