Global base oils - week of July 10: Price outlook - inter-grades

·        China’s domestic Group II base oils price discount narrows sharply vs imported supplies and vs Group I prices.

·        Outperformance of China’s domestic Group II prices follows changes in country’s consumption tax rules.

·        Europe Group I price competitiveness improves vs Group II, pointing to weakening demand and/or improving Group I availability. 

·        Europe unapproved Group III premium to Group II prices continues to narrow, providing blenders with additional supply options.

·        Europe unapproved Group III discount to approved Group III base oils continues to widen.

·        Trend boosts attraction for blenders to minimize consumption of Group III supplies with approvals.

·        Asia Group I heavy-neutrals prices continue to weaken vs light grades.

·        Asia Group I light-grades extend strong recovery vs Group II light grades, after Group I prices fell to unusually steep discount to Group II.

·        Asia Group III 4cst price premium to Group I prices stays wide even as it edges narrower.

·        US Group II heavy-grade prices maintain steep premium to light grades, contrasting with Europe and Asia.