Global base oils margins outlook: Week of 23 Sept

·        Global base oils values stay high even as they edge lower vs feedstock/competing fuel prices.

·        US Group II price-premium falls faster than in other markets.

·        Any extension of that trend could point to more of a change in US supply-demand fundamentals compared with other markets.

·        FOB Asia Group I/II base oils price premium to Singapore gasoil price stays high even after falling over past week.

·        FOB Asia Group I/II heavy-neutrals premium to gasoil holds close to multi-year high.

·        Persistently-high base oils premium points to tight supply-demand fundamentals, incentivizes refiners to increase base oils output.

·        China’s domestic Group I/II light/heavy-neutrals price premium to Shandong diesel prices extends strong rise.

·        Domestic Group I SN 400 premium to diesel rises to highest in more than three years.

·        Domestic Group II N500 premium to diesel rises to highest in almost three years.

·        Rising premium points to tight supply-demand fundamentals, especially for Group I base oils and especially for heavy neutrals.

·        CFR India Group II N70 premium to Singapore gasoil price slides to lowest in more than a month, from highest since Nov 2023.

·        Premium remains high and at level that keep arbitrage open to move very-light grade base oils to India.

·        Premium remains at level that incentivizes refiners to maintain high base oils output and to keep very-light grade supplies in the base oils rather than diesel market.

·        Europe’s Group I/II base oils premium to VGO stays high even as it edges lower.

·        Firm premium points to strong supply-demand fundamentals, incentivizing regional refiners to boost output, and refiners outside the region to move more supplies to Europe.

·        Europe Group II light-grade premium to VGO stays firmer than US Group II premium to VGO.

·        Gap between Europe and US premium to VGO increases to widest in four months.

·        US Group II export N100 premium to VGO falls to lowest in more than two months.

·        N100 premium stays high even after fall.

·        Any extension of the fall in premium could point to signs of a more marked change in supply-demand fundamentals in US market.