· Global base oils prices face prospect of adjustment in response to fall in Group I base oils supply, rise in Group II base oils supply, ICIS data shows.· Asia-Pacific Group I base oils supply falls following permanent closure of 360,000 t/yr Group I base oils plant in Japan in Oct 2023.· US Group II base oils supply could rise after Mexico imposes stricter rules on imports of oil products into the country.· Asia’s tighter Group I base oils supply could support regional prices at levels that keep more supplies in the region and deter arbitrage shipments to markets like India and UAE.· Asia’s Group I base oils prices maintained wide discount to cfr India prices over the past year, triggering larger-than-usual flow of arbitrage shipments to India/UAE in recent months..· Asia’s Group I price discount could adjust accordingly in response to tighter supply-demand fundamentals in southeast Asia.· Any subsequent fall in arbitrage shipments from Asia to India or UAE would boost demand in those markets for supplies from alternative sources.· Arbitrage to move Group I cargoes from Europe to India/UAE stays shut throughout most of this year amid tight supply in Europe..· More limited supply options could incentivize buyers to use alternatives such as Group II base oils instead, or to accept higher prices to attract more cargoes.· Tighter Group I supply contrasts with prospect of rise in Group II supplies.· Surplus Group II supply in US likely to rise amid seasonal slowdown in domestic demand at year-end.· Mexico’s stricter rules on oil product imports likely to trim US supplies bound for that market, adding to the surplus.· US base oils exports exceeded Mexico’s lube demand by around 55,000 t/month in Jan-Aug 2023.· Surplus widened from around 11,000 t/month in 2022..· Rise in surplus supply in US likely to coincide with pick-up in Group II supplies in Asia at year-end following completion of regional plant maintenance work.· Trend raises prospect of US base oils prices adjusting to levels that make arbitrage workable to outlets like India.· Prospect of tighter Group I supplies and more plentiful Group II supplies moving to markets like India could impact the price spread between Group I and Group II prices for that market and elsewhere..Global base oils - week of Nov 6: Price outlook - margins
· Global base oils prices face prospect of adjustment in response to fall in Group I base oils supply, rise in Group II base oils supply, ICIS data shows.· Asia-Pacific Group I base oils supply falls following permanent closure of 360,000 t/yr Group I base oils plant in Japan in Oct 2023.· US Group II base oils supply could rise after Mexico imposes stricter rules on imports of oil products into the country.· Asia’s tighter Group I base oils supply could support regional prices at levels that keep more supplies in the region and deter arbitrage shipments to markets like India and UAE.· Asia’s Group I base oils prices maintained wide discount to cfr India prices over the past year, triggering larger-than-usual flow of arbitrage shipments to India/UAE in recent months..· Asia’s Group I price discount could adjust accordingly in response to tighter supply-demand fundamentals in southeast Asia.· Any subsequent fall in arbitrage shipments from Asia to India or UAE would boost demand in those markets for supplies from alternative sources.· Arbitrage to move Group I cargoes from Europe to India/UAE stays shut throughout most of this year amid tight supply in Europe..· More limited supply options could incentivize buyers to use alternatives such as Group II base oils instead, or to accept higher prices to attract more cargoes.· Tighter Group I supply contrasts with prospect of rise in Group II supplies.· Surplus Group II supply in US likely to rise amid seasonal slowdown in domestic demand at year-end.· Mexico’s stricter rules on oil product imports likely to trim US supplies bound for that market, adding to the surplus.· US base oils exports exceeded Mexico’s lube demand by around 55,000 t/month in Jan-Aug 2023.· Surplus widened from around 11,000 t/month in 2022..· Rise in surplus supply in US likely to coincide with pick-up in Group II supplies in Asia at year-end following completion of regional plant maintenance work.· Trend raises prospect of US base oils prices adjusting to levels that make arbitrage workable to outlets like India.· Prospect of tighter Group I supplies and more plentiful Group II supplies moving to markets like India could impact the price spread between Group I and Group II prices for that market and elsewhere..Global base oils - week of Nov 6: Price outlook - margins
