· Prospect of fall in US base oils exports to Mexico increases importance of open arbitrage to other overseas outlets to limit year-end supply-build in US.· Prospect of drop in US flows to Mexico would coincide with seasonal slowdown in its domestic demand at year-end.· Prospect of weaker demand and rising supply increases importance of keeping shut the arbitrage to Americas from other markets like Asia.· US export base oils prices rose relative to other markets like Europe, Mideast Gulf and India during Q3 2023, ICIS data shows.· Trend suggests US supply-demand fundamentals were sufficiently balanced to avoid need to move surplus supplies to those markets.· Ongoing wave of US base oils exports to Mexico throughout Q3 2023 provide key outlet for surplus light-grade supplies especially, helping to sustain supply-demand balance..· Prospect of slowdown in US flows to Mexico increases importance of access to other markets instead.· US prices would need to move to wider discount to prices in those other markets to make arbitrage more feasible.· US Group II light-grade discount to Europe prices widens in 1H Nov 2023 to around $150/t, contrasts with discount of more than $400/t as recently as early Aug 2023..· US Group II light-grade prices flip to premium to cfr UAE prices from end-Sep 2023, from discount to UAE prices in first eight months of 2023.· US Group II light-grade prices flip to premium to cfr India prices since end-Aug 2023, from discount to India prices in 1H 2023..· Prices in those destination markets would need to rise, or US prices would need to fall, to make the arbitrage more feasible.· Light-grade prices in India fell in recent weeks partly in response to prospect of rise in US supply.· Trend suggests prices are more likely to fall in US market than prices rise in destination markets to make arbitrage more feasible.· Lower US prices would also make less feasible the arbitrage to move supplies from Europe or Asia to the Americas market.· Discount of Asia Group II light grades to US export prices widens to more than $100/t in recent weeks, from premium to US prices in Q2-Q3 2023..· Wider Asia price discount to US prices increases interest in working arbitrage to Americas.· Prospect of rise in surplus US supply would coincide with signs of relatively balanced supply in Asia-Pacific, especially compared with year-earlier levels.· Supply fundamentals in US and Asia suggest US market has more pressure than Asia to deter shipments from moving to the Americas from other regions like Asia.· Supply fundamentals suggest prices in Asia would have less need to respond to an adjustment in US prices that made US prices more competitive..Global base oils - week of Nov 13: Price outlook - margins
· Prospect of fall in US base oils exports to Mexico increases importance of open arbitrage to other overseas outlets to limit year-end supply-build in US.· Prospect of drop in US flows to Mexico would coincide with seasonal slowdown in its domestic demand at year-end.· Prospect of weaker demand and rising supply increases importance of keeping shut the arbitrage to Americas from other markets like Asia.· US export base oils prices rose relative to other markets like Europe, Mideast Gulf and India during Q3 2023, ICIS data shows.· Trend suggests US supply-demand fundamentals were sufficiently balanced to avoid need to move surplus supplies to those markets.· Ongoing wave of US base oils exports to Mexico throughout Q3 2023 provide key outlet for surplus light-grade supplies especially, helping to sustain supply-demand balance..· Prospect of slowdown in US flows to Mexico increases importance of access to other markets instead.· US prices would need to move to wider discount to prices in those other markets to make arbitrage more feasible.· US Group II light-grade discount to Europe prices widens in 1H Nov 2023 to around $150/t, contrasts with discount of more than $400/t as recently as early Aug 2023..· US Group II light-grade prices flip to premium to cfr UAE prices from end-Sep 2023, from discount to UAE prices in first eight months of 2023.· US Group II light-grade prices flip to premium to cfr India prices since end-Aug 2023, from discount to India prices in 1H 2023..· Prices in those destination markets would need to rise, or US prices would need to fall, to make the arbitrage more feasible.· Light-grade prices in India fell in recent weeks partly in response to prospect of rise in US supply.· Trend suggests prices are more likely to fall in US market than prices rise in destination markets to make arbitrage more feasible.· Lower US prices would also make less feasible the arbitrage to move supplies from Europe or Asia to the Americas market.· Discount of Asia Group II light grades to US export prices widens to more than $100/t in recent weeks, from premium to US prices in Q2-Q3 2023..· Wider Asia price discount to US prices increases interest in working arbitrage to Americas.· Prospect of rise in surplus US supply would coincide with signs of relatively balanced supply in Asia-Pacific, especially compared with year-earlier levels.· Supply fundamentals in US and Asia suggest US market has more pressure than Asia to deter shipments from moving to the Americas from other regions like Asia.· Supply fundamentals suggest prices in Asia would have less need to respond to an adjustment in US prices that made US prices more competitive..Global base oils - week of Nov 13: Price outlook - margins
