Global base oils - week of Sep 11: Price outlook - margins

·        Global base oils prices stay weak/extend fall versus competing and feedstock prices, ICIS data shows.

·        Light-grade export prices globally maintain discounts to diesel prices.

·        Group I heavy-neutrals prices maintain discount to gasoil in Asia, barely profitable in Europe.

·        Weak export prices versus diesel incentivize refiners to minimize production, focus on producing more diesel instead.

·        Any extension of such moves would coincide with round of plant maintenance work in Asia, and tight Group I supplies in Europe.

·        Asia’s Group II prices strengthen in first-half September to firmest versus diesel since late July amid higher outright prices.

·        Asia’s Group II prices remain at discount or barely profitable versus diesel even with recent recovery in values versus diesel, as diesel prices also rise.

·        China’s domestic Group II light-grade premium to Shandong diesel prices shows signs of consolidating in recent weeks close to lowest level since Oct 2022.

·        Europe’s Group I base oils values hold close to lowest versus gasoil in at least six months.

·        Europe’s Group II base oils values at lowest versus gasoil in more than four months.

·        Europe’s Group III base oils prices at ten-month low versus gasoil.

·        Europe’s base oils price premium to vacuum gasoil (VGO) extends dip, with speed of fall gathering pace.

·        US’ domestic Group II light-grade price premium to heating oil holds close to lowest since 1H 2022.

·        US’ domestic Group II light-grade posted price premium to heating oil holds close to lowest since Oct 2022, erasing most of impact of rise in outright prices in Aug 2023.

·        US’ domestic Group III premium to heating oil falls to ten-month low.

·        US’ domestic Group II light-grade premium to VGO falls to lowest since Feb 2022.

·        Falling base oils premium to heating oil/VGO raises prospect of run-cuts or further moves to raise prices.