· US export base oils price premium to feedstock/heating oil prices holds in narrow range even as outright prices fall.· Lower export prices could reflect concern about availability of lingering or additional supplies if domestic demand lags expectations.· Lower export prices follow unusually steady outright prices and steadier differentials vs VGO in first two months of 2025..· Those price dynamics added to signs of more manageable surplus supply at start of 2025..· More manageable supply balance early this year followed smaller-than-usual rise in US’ surplus supply at end-2024..· Smaller surplus late last year and early this year raised prospect of firmer fundamentals in coming weeks amid seasonal rise in demand and pick-up in plant maintenance work in late-Q1 2025.· Firmer fundamentals would support steady or higher export prices.· Lower export prices instead point to weaker fundamentals..· US base oils imports show signs of holding at lower levels in Q1 2025 than in Q4 2024 even with pick-up in supplies in Jan 2025 and March 2025.· Lower imports would help to keep US base oils supply at more manageable levels early this year.· Any such trend would limit build-up of Group III base oils supplies, which domestic refiners have less control over.· US Group III base oils prices hold firmer vs Group II prices from late-2024, pointing to signs of improved supply fundamentals since then..· Firmer Group III prices coincide with fall in US base oils imports in Q4 2024 to lowest level since 2020..· Extension of price-strength so far in Q1 2025, and rise in Group III prices in March 2025, adds to signs of more manageable Group III supplies so far this year.· Tighter base oils supply in Latin America could get further squeeze after cargo from Argentina moves to Nigeria in March 2025.· Argentina’s base oils exports rise sharply in recent months, with shipments mostly bound for Brazil.· Shipment of cargo to Nigeria rather than to Brazil could point to more muted buying interest in Brazil..· Europe’s Group I base oils supply shows signs of staying balanced-to-tight after starting Q1 2025 with smaller-than-usual surplus.· Seasonal pick-up in demand and any upcoming plant maintenance work would further squeeze availability of surplus volumes.· Europe’s Group I surplus stays more manageable after region’s Group I supply falls to multi-year low in Q4 2024..· Drop in supply reflects combination of lower output and pick-up in Group I exports to overseas markets in Q4 2024 to highest level in almost two years..· Smaller surplus early this year curbs pressure on refiners to cut prices to boost overseas demand.· Smaller surplus raises prospect of lower-than-usual exports from Europe in first few months of 2025.· Dynamic puts onus on overseas markets to line up sufficient supplies from other sources instead.· Dynamic incentivizes those overseas markets to boost their procurement of alternative supplies such as Group II base oils instead..· Europe’s Group II base oils supply could be more readily available, with prospect of steady regional output cutting requirements for additional volumes from overseas markets.· Same dynamic already supported firm supply levels in Q4 2024 that matched Group I supply for first time..· Europe’s Group II base oils imports from US could stay lower in coming weeks as plant maintenance and seasonal rise in demand curb surplus availability in that market.· US Group II export prices weaken relative to Europe prices in early-March 2025, pointing to weaker rather than tighter fundamentals in US market..· Any unexpected rise in surplus supplies in US, and wider price discount to Europe prices, would increase attraction of lining arbitrage shipments to the region..· Europe’s Group III base oils prices fall to deeper discount to US prices..· Widening discount increases attraction of moving more Group III supplies to other markets like US instead of to Europe..Americas/EMEA base oils demand outlook: Week of 10 March.Asia base oils supply outlook: Week of 10 March.Global base oils margins outlook: Week of 10 March.Global base oils arb outlook: Week of 10 March.Global base oils cargo flows: Week of 10 March.US’ December base oils supply falls .Netherlands’ Dec base oils output rises.UK’s December base oils output falls
