· Diesel prices hold firm relative to higher crude oil prices, well above lows in April 2023.· Firmer diesel values and weaker base oils values vs diesel incentivize refiners to limit base oils surplus.· Planned plant maintenance set to be lighter over coming months.· Atlantic hurricane season raises prospect of unplanned plant shutdowns over coming months.· Arbitrage to move shipments to US/Americas stays hard to work, limiting flow of additional supplies to the region.· Arbitrage to move shipments to Europe stays more feasible, and curbs outlets for any surplus European supplies.· Rise in US base oils exports through Q2 2023 helps to curb supply-build, contrasts with signs of slowdown in overseas shipments from Europe.· US’ April base oils output stays lower than usual amid extended plant maintenance.· US base oils prices face ongoing pressure through Q2 2023 even with lower US base oils supply in first four months of 2023..· Trend reflects impact of unusually weak domestic demand.· Any further rise in supply and extension of demand weakness would put more pressure on prices.· Wave of US exports in Q2 2023 likely cushions impact of weak domestic demand, curbs size of surplus at start of Q3 2023.· Brazil faces another base oils supply shortfall in May as muted output and imports contrast with firm demand.· Trend raises prospect of firm demand for supplies from US especially to avoid shortage.· Wave of US exports in Q2 2023 contrasts with less workable arbitrage for European exports amid limited surplus supplies.· Signs of rising surplus in Europe at start of Q3 2023 would need reciprocal price or output adjustment to avoid supply-build.· Surge in Netherlands’ base oils supply in early Q2 2023 mirrors rise in output in other European markets even amid more muted demand..· Trend reflects plentiful availability of premium-grade base oils, boosting attraction for European blenders to use more of the product in place of Group I base oils.· Trend highlights ongoing risk of build-up of surplus supplies and need to clear surplus through overseas markets.· Closed arbitrage makes those moves more complicated.· Surplus throughout Europe likely to be higher as blenders take longer to consume supplies.· Surplus volumes counter impact of regional plant maintenance work during Q2 2023.· Europe’s premium-grade supplies get additional boost from rising flows from US in Q2 2023..· Lingering surplus volumes likely to keep pressure on region’s premium-grade prices until supply-demand fundamentals balance out.· Netherlands’ unusually large base oils imports from Turkey in early Q2 2023 coincide with changing trade flows throughout region.· Any repeat of that trend would raise prospect of unexpected additional supplies moving to Europe..· UK’s net base oils supply surplus rises at start of Q2 2023 to 28-month high..· Surge in net surplus partly reflects slowdown in exports to markets outside Europe, mirroring similar trend in Netherlands.· Trend suggests regional refiners are focusing on demand in European market, where prices are higher than in overseas markets.· But demand in European market is insufficient to absorb regional supply, especially in Q3 2023.· Rising supply surplus eases impact of regional plant maintenance in Q2 2023, raises prospect of need to clear surplus volumes in coming months unless output falls.· Like India and China, Turkey’s base oils production could benefit from lower costs of feedstock of Russian origin combined with sales at market prices..· Europe’s supply of Group III base oils with approvals likely to recover in Q3 2023 after sharp slowdown in shipments during Q2 2023..· Limited outright supply of Group III base oils with approvals likely to provide some price support.· Rising supply of Group III base oils with no or limited approvals set to attract more buyers, cutting demand for supplies with approvals.· Trend likely to put pressure on Group III prices with approvals..Americas/EMEA base oils - week of July 10: Demand outlook
· Diesel prices hold firm relative to higher crude oil prices, well above lows in April 2023.· Firmer diesel values and weaker base oils values vs diesel incentivize refiners to limit base oils surplus.· Planned plant maintenance set to be lighter over coming months.· Atlantic hurricane season raises prospect of unplanned plant shutdowns over coming months.· Arbitrage to move shipments to US/Americas stays hard to work, limiting flow of additional supplies to the region.· Arbitrage to move shipments to Europe stays more feasible, and curbs outlets for any surplus European supplies.· Rise in US base oils exports through Q2 2023 helps to curb supply-build, contrasts with signs of slowdown in overseas shipments from Europe.· US’ April base oils output stays lower than usual amid extended plant maintenance.· US base oils prices face ongoing pressure through Q2 2023 even with lower US base oils supply in first four months of 2023..· Trend reflects impact of unusually weak domestic demand.· Any further rise in supply and extension of demand weakness would put more pressure on prices.· Wave of US exports in Q2 2023 likely cushions impact of weak domestic demand, curbs size of surplus at start of Q3 2023.· Brazil faces another base oils supply shortfall in May as muted output and imports contrast with firm demand.· Trend raises prospect of firm demand for supplies from US especially to avoid shortage.· Wave of US exports in Q2 2023 contrasts with less workable arbitrage for European exports amid limited surplus supplies.· Signs of rising surplus in Europe at start of Q3 2023 would need reciprocal price or output adjustment to avoid supply-build.· Surge in Netherlands’ base oils supply in early Q2 2023 mirrors rise in output in other European markets even amid more muted demand..· Trend reflects plentiful availability of premium-grade base oils, boosting attraction for European blenders to use more of the product in place of Group I base oils.· Trend highlights ongoing risk of build-up of surplus supplies and need to clear surplus through overseas markets.· Closed arbitrage makes those moves more complicated.· Surplus throughout Europe likely to be higher as blenders take longer to consume supplies.· Surplus volumes counter impact of regional plant maintenance work during Q2 2023.· Europe’s premium-grade supplies get additional boost from rising flows from US in Q2 2023..· Lingering surplus volumes likely to keep pressure on region’s premium-grade prices until supply-demand fundamentals balance out.· Netherlands’ unusually large base oils imports from Turkey in early Q2 2023 coincide with changing trade flows throughout region.· Any repeat of that trend would raise prospect of unexpected additional supplies moving to Europe..· UK’s net base oils supply surplus rises at start of Q2 2023 to 28-month high..· Surge in net surplus partly reflects slowdown in exports to markets outside Europe, mirroring similar trend in Netherlands.· Trend suggests regional refiners are focusing on demand in European market, where prices are higher than in overseas markets.· But demand in European market is insufficient to absorb regional supply, especially in Q3 2023.· Rising supply surplus eases impact of regional plant maintenance in Q2 2023, raises prospect of need to clear surplus volumes in coming months unless output falls.· Like India and China, Turkey’s base oils production could benefit from lower costs of feedstock of Russian origin combined with sales at market prices..· Europe’s supply of Group III base oils with approvals likely to recover in Q3 2023 after sharp slowdown in shipments during Q2 2023..· Limited outright supply of Group III base oils with approvals likely to provide some price support.· Rising supply of Group III base oils with no or limited approvals set to attract more buyers, cutting demand for supplies with approvals.· Trend likely to put pressure on Group III prices with approvals..Americas/EMEA base oils - week of July 10: Demand outlook
