Global base oils – week of June 12: Price outlook – inter-grades

·        Europe’s Group II light-grade prices move to wider discount to Group I prices.

·        Competitive Group II prices versus Group I incentivize European blenders to procure more of the premium-grade supplies.

·        Trend mirrors similar pattern in Asia, where Group II prices remain at a narrower premium to Group I.

·        Widening Europe Group II light-grade discount to Group III prices adds to attraction of using more Group II base oils.

·        Widening gap between approved and semi-approved Group III base oils incentivize blenders to minimize consumption of supplies with approvals.

·        Asia Group I heavy-neutrals premium to light grades stays wider than usual.

·        Asia Group II light-grade premium to Group I light grades at widest in close to a year.

·        Trend suggests Group I light-grade prices are unusually low relative to other grades.

·        Lack of Group I light-grade price reaction could reflect impact of unusually low cfr India Group I light-grade prices amid steady flows from China.

·        Prices for cfr India supplies at steep discount to domestic Chinese SN 150 prices.

·        Asia Group I bright stock premium to SN 500 stays at lowest since December as closed arbitrage to China curbs key outlet for the supplies.

·        Asia Group II heavy-grade premium to light grades stays much narrower than in Europe/US.

·        US Group II posted price premium to spot prices narrows.

·        Narrower posted-price premium could spur more buying interest from buyers that had held back in anticipation of a price-cut.