Global base oils - week of Dec 4: Price outlook - margins

·        Global base oils values hold firm vs feedstock/competing fuel prices, especially in Europe and US, ICIS data shows.

·        Firm base oils values incentivize refiners to maintain or increase output at a time of year when demand faces a seasonal slowdown.

·        Fob Asia Group II price premium to regional gasoil prices edges down, holds well above Q3 2023 levels.

·        Still-firm premium to diesel limits incentive for refiners to trim base oil run-rates.

·        Fob Asia Group I price premium to regional gasoil prices holds steady, close to highest since end-Q2 2023.

·        Fob Asia Group I premium to gasoil holds firmer than Group II premium, reflecting tighter supply fundamentals of Group I base oils.

·        Domestic China Group II light-grade price premium to Shandong diesel prices extends fall.

·        Price-premium falls as outright base oils prices dip, while diesel prices hold firmer.

·        Falling price-premium from 2H Nov 2023 mirrors year-earlier trend.

·        Price premium to diesel then rebounded from mid-Dec 2022 to Apr 2023.

·        Premium of cfr India light-grade prices to regional diesel prices extends slide, down almost $100/t in less than a month.

·        Premium of cfr India light grades vs diesel still up more than $180/t since Aug 2023, close to average for the year of more than $130/t.

·        Sliding cfr India premium to diesel, and speed of fall, puts pressure on refiners to adjust run-rates.

·        Base oil price premiums to diesel for China/cfr India prices weaken more steeply than for fob Asia prices.

·        Trend could put more pressure on fob Asia price premium.

·        Europe’s Group I export price premium to gasoil extends rise to highest since early Q3 2023.

·        Europe’s Group I export SN 150 price premium to gasoil holds more than $80/t above average for the year.

·        Europe’s Group I domestic price premium to VGO holds at highest since early Aug 2023.

·        Europe’s Group II light-grade price premium to VGO extends rise to highest since July 2023.

·        Europe’s Group II light-grade price premium to VGO rises close to average for the year of around $530/t.

·        Firm base oils values incentivize refiners to maintain or increase base oils supply.

·        US Group II light-grade export price premium to heating oil holds relatively firm even after recent fall since early-Nov 2023.

·        US Group II light-grade export price premium to heating oil stays more than $250/t higher than in Aug 2023.

·        Stronger premium gives refiners more leverage to maintain firm margins even if they adjust prices lower.

·        US Group II heavy-grade export premium to heating oil extends slide, reducing attraction of producing additional supplies.

·        US Group II heavy-grade export premium to VGO falls below light-grade premium for first time in a year.

·        Lower heavy-grade premium to VGO increases importance of other grades maintaining firmer margins to balance out heavy-grade weakness.

·        US Group II heavy-grade domestic premium to VGO holds firm and at steep premium to light-grade premium.

·        US Group II heavy-grade domestic posted-price premium to VGO falls below average for the year, stays high vs levels before 2023.