· Diesel prices rise faster than higher crude oil prices, pushing up their premium to crude to highest since Jan 2023.· Rising diesel premium to crude contrasts with base oils’ falling premium to diesel.· Trend incentivizes refiners to cut base oils output or pour light-grade base oils back into diesel pool.· US base oils exports to Latin America rise to record-high in first five months of 2023..· Trend coincides with steady-to-lower base oils imports in key Latin American markets.· Trend reflects US base oils’ rising share of Latin America’s base oils imports.· Extension of that trend would likely help to limit repeat of supply-build that US refiners faced in 2022.· More US supplies likely to move to Latin America in response to firmer-than-expected demand and upcoming plant maintenance in the region over coming months.· South Korea’s June base oils exports to US fall to lowest since beginning of February 2021..· Slowdown coincides with plant-maintenance in South Korea and weaker US Group III prices and demand.· Still-weak US prices and demand in Q3 2023 could incentivize South Korean refiners to maintain lower shipments to the region even after completion of plant maintenance work.· South Korea’s June Group III base oils exports to Europe fall to five-month low..· Slowdown in shipments follows restart of Group III unit in Spain after maintenance work, and large flow of shipments from Mideast Gulf to Europe.· Shipments to Europe could rise in Q3 2023 following restart of Group III unit in South Korea after maintenance work.· Any additional flows to Europe could add to signs of oversupply of Group III base oils in the region.· Europe’s Group I base oils supply could tighten amid planned/extended plant maintenance work, rise in shipments to Ukraine, loss of Russian shipments, and weak margins. · UK’s May base oils exports extend fall to Europe, extend rise to Africa..· Trend reflects structural market change as Europe consumes more premium-grade base oils and Africa lines up alternative supplies following fall in shipments from Russia and Europe.· UK’s domestic supply shows signs of rising through Q2 2023.· Europe/Baltic base oils exports to Nigeria fall to one-year low in May, reflecting more limited surplus supply and complication of Russian base oils shipments to Africa..· Slowdown likely reflects structural change, forcing Nigerian buyers to turn to other markets to cover base oils requirements.· Italy’s May base oils output falls to three-month low, lags domestic demand as plant maintenance begins..· Pause in surplus base oils exports from Europe since May highlight role of Italy as key marginal supplier of Group I base oils for the region.· Trend shows Italy’s lower output leaves regional supply tight; any rise in output leaves region with surplus..Global base oils - week of July 31: Price outlook - margins
· Diesel prices rise faster than higher crude oil prices, pushing up their premium to crude to highest since Jan 2023.· Rising diesel premium to crude contrasts with base oils’ falling premium to diesel.· Trend incentivizes refiners to cut base oils output or pour light-grade base oils back into diesel pool.· US base oils exports to Latin America rise to record-high in first five months of 2023..· Trend coincides with steady-to-lower base oils imports in key Latin American markets.· Trend reflects US base oils’ rising share of Latin America’s base oils imports.· Extension of that trend would likely help to limit repeat of supply-build that US refiners faced in 2022.· More US supplies likely to move to Latin America in response to firmer-than-expected demand and upcoming plant maintenance in the region over coming months.· South Korea’s June base oils exports to US fall to lowest since beginning of February 2021..· Slowdown coincides with plant-maintenance in South Korea and weaker US Group III prices and demand.· Still-weak US prices and demand in Q3 2023 could incentivize South Korean refiners to maintain lower shipments to the region even after completion of plant maintenance work.· South Korea’s June Group III base oils exports to Europe fall to five-month low..· Slowdown in shipments follows restart of Group III unit in Spain after maintenance work, and large flow of shipments from Mideast Gulf to Europe.· Shipments to Europe could rise in Q3 2023 following restart of Group III unit in South Korea after maintenance work.· Any additional flows to Europe could add to signs of oversupply of Group III base oils in the region.· Europe’s Group I base oils supply could tighten amid planned/extended plant maintenance work, rise in shipments to Ukraine, loss of Russian shipments, and weak margins. · UK’s May base oils exports extend fall to Europe, extend rise to Africa..· Trend reflects structural market change as Europe consumes more premium-grade base oils and Africa lines up alternative supplies following fall in shipments from Russia and Europe.· UK’s domestic supply shows signs of rising through Q2 2023.· Europe/Baltic base oils exports to Nigeria fall to one-year low in May, reflecting more limited surplus supply and complication of Russian base oils shipments to Africa..· Slowdown likely reflects structural change, forcing Nigerian buyers to turn to other markets to cover base oils requirements.· Italy’s May base oils output falls to three-month low, lags domestic demand as plant maintenance begins..· Pause in surplus base oils exports from Europe since May highlight role of Italy as key marginal supplier of Group I base oils for the region.· Trend shows Italy’s lower output leaves regional supply tight; any rise in output leaves region with surplus..Global base oils - week of July 31: Price outlook - margins