· Europe’s Group I base oils prices hold steadier than usual at a time of year when they typically fall, ICIS data shows.· Steady prices coincide with supply-demand fundamentals that are more balanced than usual for the time of year.· More balanced fundamentals at end-2023 raises prospect of earlier pick-up in demand at start of 2024.· Europe’s Group I base oils prices extend rise versus VGO throughout Q4 2023, exceed year-to-date average levels..· Rising Group I prices versus VGO contrast with slump in Group I premium to VGO in Q4 2021 and Q4 2022.· Lower premium to VGO at year-end often reflects supply-demand imbalance as blenders cut inventories and producers cut prices to clear surplus supplies.· Rising premium to VGO this year adds to signs of smaller-than-usual supply surplus.· Group I price strength is relative.· Higher Group I premium to VGO in Q4 2023 remains lower than falling Group I premium to VGO in Q4 2022.· Relatively lower Group I premium to VGO continues to curb incentive for refiners to boost output in Q4 2023.· High Group I premium to VGO in Q2-Q3 2022 incentivized refiners to maintain or raise base oils output, adding to surplus at end-2022.· Europe’s Group I supply in Q3 2023 holds unusually low at similar levels to Q2 2023 and down more than 10pc yoy. · Quarterly volume holds close to lowest in more than five years..· Lower Group I supply in Q3 2023 counters impact of seasonal drop in lube demand, curbs supply-build ahead of Q4 2023..· Europe’s Group I market faces additional requirements from Asia-Pacific in Q4 2023 following closure of Group I plant in Japan in Oct 2023..· Europe’s lube demand extends contraction through Q3 2023, but at slower pace than in 1H 2023 and Q4 2022..· Europe’s blenders maintain low stocks throughout 2023 in response to sustained slowdown in demand.· Blenders built large stocks in Q1-Q3 2022 as concern about security of supply took precedence over slowdown in lube demand.· Blenders’ lower stocks this year and expectations of steadier base oils prices likely to limit size of drop in demand at year-end.· More balanced supply and steadier demand at year-end likely to curb volume of surplus supplies carried into start of 2024.· More balanced fundamentals raise prospect of easing the kind of pressure that base oils prices typically face in the month of January each year..Global base oils - week of Dec 4: Price outlook - margins
· Europe’s Group I base oils prices hold steadier than usual at a time of year when they typically fall, ICIS data shows.· Steady prices coincide with supply-demand fundamentals that are more balanced than usual for the time of year.· More balanced fundamentals at end-2023 raises prospect of earlier pick-up in demand at start of 2024.· Europe’s Group I base oils prices extend rise versus VGO throughout Q4 2023, exceed year-to-date average levels..· Rising Group I prices versus VGO contrast with slump in Group I premium to VGO in Q4 2021 and Q4 2022.· Lower premium to VGO at year-end often reflects supply-demand imbalance as blenders cut inventories and producers cut prices to clear surplus supplies.· Rising premium to VGO this year adds to signs of smaller-than-usual supply surplus.· Group I price strength is relative.· Higher Group I premium to VGO in Q4 2023 remains lower than falling Group I premium to VGO in Q4 2022.· Relatively lower Group I premium to VGO continues to curb incentive for refiners to boost output in Q4 2023.· High Group I premium to VGO in Q2-Q3 2022 incentivized refiners to maintain or raise base oils output, adding to surplus at end-2022.· Europe’s Group I supply in Q3 2023 holds unusually low at similar levels to Q2 2023 and down more than 10pc yoy. · Quarterly volume holds close to lowest in more than five years..· Lower Group I supply in Q3 2023 counters impact of seasonal drop in lube demand, curbs supply-build ahead of Q4 2023..· Europe’s Group I market faces additional requirements from Asia-Pacific in Q4 2023 following closure of Group I plant in Japan in Oct 2023..· Europe’s lube demand extends contraction through Q3 2023, but at slower pace than in 1H 2023 and Q4 2022..· Europe’s blenders maintain low stocks throughout 2023 in response to sustained slowdown in demand.· Blenders built large stocks in Q1-Q3 2022 as concern about security of supply took precedence over slowdown in lube demand.· Blenders’ lower stocks this year and expectations of steadier base oils prices likely to limit size of drop in demand at year-end.· More balanced supply and steadier demand at year-end likely to curb volume of surplus supplies carried into start of 2024.· More balanced fundamentals raise prospect of easing the kind of pressure that base oils prices typically face in the month of January each year..Global base oils - week of Dec 4: Price outlook - margins
