Global base oils - week of Oct 16: Price outlook - margins

·        Global base oils prices maintain firmer premium vs diesel/feedstock prices since start of Oct 2023 even as they slip from recent highs, ICIS data shows.

·        Base oils premium to diesel/feedstock prices recover at a time of year when demand faces a seasonal slowdown.

·        Firmer base oils premium to diesel/feedstock prices coincides with slowdown in plant maintenance activity in Americas/Europe, raising prospect of rise in supply.

·        Firmer base oils premium incentivizes refiners to maintain rather than cut supply, increasing possibility of pick-up in surplus volumes during final months of the year.

·        Asia base oils prices extend recovery versus gasoil – Group II premium to gasoil rises to highest in more than three months.

·        Asia Group I light-grade prices maintain discount to gasoil even as they rebound by more than $100/t in less than a month.

 ·        China’s domestic light-grade Group II base oils premium to Shandong diesel rebounds to three-month high.

·        If sustained, firmer base oils premium could point to pick-up in demand.

·        Europe’s Group I/II base oils values vs gasoil hold much firmer vs end-Sep 2023, even if still relatively low, especially for Group II.

·        Europe Group III base oils values vs gasoil hold close to lowest in more than a year.

·        Europe Group I base oils values vs VGO extend recovery since mid-Sep 2023.

·        Europe Group II base oils values vs VGO extend recovery but remain lower than usual.

·        US Group II export price premium to heating oil erases most of this month’s gains, stays higher than at end-Aug 2023.

·        US Group II/III price premium to VGO stays low even as it extends recovery from recent lows in mid-Sep 2023.