Global base oils - week of Aug 7: Price outlook - margins

·        Global base oils prices extend steep slide versus crude and diesel.

·        Strength of diesel prices contrasts with and compounds pressure on base oils values.

·        Moves by some refiners in US to raise posted prices highlight pressure from squeezed margins.

·        Sliding margins incentivize refiners to cut base oils output, boost diesel output.

·        Europe’s Group I price premium to diesel falls more than $350/t since late June to lowest since Jan 2023.

·        Europe’s Group II price premium to diesel falls close to $200/t since late June to lowest since early March 2023.

·        Asia’s Group I/II prices fall by more than $250/t since late June, move to even steeper discount to diesel.

·        Asia’s Group I discount to diesel widens to lowest since Nov 2022; Group II discount widens to lowest since Jan 2023.

·        China’s domestic Group II light-grade base oil premium to Shandong diesel prices extends steep fall to lowest since Oct 2022.

·        Sliding base oils values and firm diesel values incentivize Chinese refiners to extend shutdowns, delay restart of shut-in capacity and pause start-up of new capacity.

·        US Group II light-grade posted price premium to diesel mixed as some refiners raise posted prices.

·        US Group II posted price premium to diesel stays close to lowest since January even with higher posted prices.