· US domestic base oils prices hold steady versus feedstock prices, at levels similar to where they bottomed out in Q1 2024.· US export base oils prices hold steady versus feedstock prices, at higher levels than where they bottomed out in Q1 2024..· Dynamic points to similar supply-demand fundamentals in Q1 this and last year in domestic market.· Dynamic points to firmer supply-demand fundamentals in Q1 2025 in export market.· Dynamic adds to signs of more manageable supply surplus this year than last year.· Supply fundamentals set to tighten further in coming weeks as plant maintenance works coincides with seasonal rise in demand.· Cargo bound for Nigeria in Feb 2025 extends regular flow of shipments to that market.· Shipment points to ongoing supply surplus in US market.· Shipment points to regular moves to clear surplus from US market, limiting build-up of surplus volumes..· US base oils imports set to get boost in March 2025 from arrival of several large shipments from Middle East and South Korea.· Pick-up in imports would follow signs of slowdown in shipments in Feb 2025 from Jan 2025, and rise in imports in Jan 2025 from Dec 2024.· Pattern would extend trend since Q3 2024 of unusually volatile monthly import volumes..· Sharp change in monthly shipment volumes mostly reflects volatility of flows from Middle East since Q3 2024.· Volatility of flows from that market could reflect combination of weak demand and prices in Europe, rising Group III supply in China, and production issues in Middle East.· Volatility of shipment volumes likely complicates logistics of managing the supplies..· US base oils imports in 2024 edge up slightly from 2023 even after imports slump by 9% in H1 2024..· Rebound in base oils imports in H2 2024 coincides with steadier-to-firmer Group III prices relative to Group II prices, and especially relative to Europe prices..· US Group III prices flip to premium to Europe prices in Feb 2025 for first time since April 2024..· Ongoing rebound in US prices relative to Europe prices adds to incentive for overseas refiners to direct more shipments to US.· Firmer US Group III price differentials, even with rebound in imports, point to supply fundamentals that are more balanced than in Q1-Q3 2024.· More balanced supply fundamentals would point to change in other supply sources, such as from domestic refiners. .· Europe’s surplus Group I base oils supply shows signs of holding at manageable levels so far in Q1 2025.· More manageable supply curbs pressure on adjustment in prices to open arbitrage to outlets like Africa and Middle East.· Italy’s base oils output exceeds consumption in Dec 2024 for second month, pointing to build-up of surplus volumes at year-end..· Output still lags consumption in Q3 2024 and Q4 2024, contrasts with supply surplus in Q4 2023.· Supply shortfall in Q3-Q4 2024 suggests any surplus volumes are limited..· Surge in shipments from Russia to Turkey at end-2024 curbs that country’s role as outlet for surplus supplies from Europe at year-end.· Europe’s Group I export price premium versus VGO and versus other markets like India remain well above levels in Q1 2024.· Firmer base oils differentials add to signs of smaller supply-build even with more limited access to markets like Turkey.· Base oils differentials hold at firmer levels even as additional supplies move from Turkey to Europe at end-2024..· Shipments highlight attraction of tapping Europe’s steep Group I price premium to Turkey’s imported cargo prices.· Shipments point to ongoing demand for Group I base oils in Europe even at year-end..· Europe’s Group I base oils supply stays relatively steady in first eleven months of 2024..· Steady supply contrasts with more volatile supply of Group II and Group III base oils.· Steady supply could boost attraction of slowing any switch away from Group I base oils..· Europe’s Group II base oils supply could face more manageable surplus early this year following sustained dip in US exports to Europe at end-2024.· US base oils exports to Europe fall in Q4 2024 to lowest in at least a decade..· Drop in shipments cushions impact of seasonal slowdown in demand and prospect of higher regional Group II base oils output in Europe early this year vs Q1 2024.· Drop in shipments adds to signs that US' removal of surplus supplies at end-2024 had more limited impact than usual on key overseas outlets like Europe..Americas/EMEA base oils demand outlook: Week of 17 Feb.Asia base oils supply outlook: Week of 17 Feb.Global base oils margins outlook: Week of 17 Feb.Global base oils cargo flows: Week of 17 Feb.Global base oils arb outlook: Week of 17 Feb.US Dec base oil exports to S America fall.US’ December base oils imports fall
· US domestic base oils prices hold steady versus feedstock prices, at levels similar to where they bottomed out in Q1 2024.· US export base oils prices hold steady versus feedstock prices, at higher levels than where they bottomed out in Q1 2024..· Dynamic points to similar supply-demand fundamentals in Q1 this and last year in domestic market.· Dynamic points to firmer supply-demand fundamentals in Q1 2025 in export market.· Dynamic adds to signs of more manageable supply surplus this year than last year.· Supply fundamentals set to tighten further in coming weeks as plant maintenance works coincides with seasonal rise in demand.· Cargo bound for Nigeria in Feb 2025 extends regular flow of shipments to that market.· Shipment points to ongoing supply surplus in US market.· Shipment points to regular moves to clear surplus from US market, limiting build-up of surplus volumes..· US base oils imports set to get boost in March 2025 from arrival of several large shipments from Middle East and South Korea.· Pick-up in imports would follow signs of slowdown in shipments in Feb 2025 from Jan 2025, and rise in imports in Jan 2025 from Dec 2024.· Pattern would extend trend since Q3 2024 of unusually volatile monthly import volumes..· Sharp change in monthly shipment volumes mostly reflects volatility of flows from Middle East since Q3 2024.· Volatility of flows from that market could reflect combination of weak demand and prices in Europe, rising Group III supply in China, and production issues in Middle East.· Volatility of shipment volumes likely complicates logistics of managing the supplies..· US base oils imports in 2024 edge up slightly from 2023 even after imports slump by 9% in H1 2024..· Rebound in base oils imports in H2 2024 coincides with steadier-to-firmer Group III prices relative to Group II prices, and especially relative to Europe prices..· US Group III prices flip to premium to Europe prices in Feb 2025 for first time since April 2024..· Ongoing rebound in US prices relative to Europe prices adds to incentive for overseas refiners to direct more shipments to US.· Firmer US Group III price differentials, even with rebound in imports, point to supply fundamentals that are more balanced than in Q1-Q3 2024.· More balanced supply fundamentals would point to change in other supply sources, such as from domestic refiners. .· Europe’s surplus Group I base oils supply shows signs of holding at manageable levels so far in Q1 2025.· More manageable supply curbs pressure on adjustment in prices to open arbitrage to outlets like Africa and Middle East.· Italy’s base oils output exceeds consumption in Dec 2024 for second month, pointing to build-up of surplus volumes at year-end..· Output still lags consumption in Q3 2024 and Q4 2024, contrasts with supply surplus in Q4 2023.· Supply shortfall in Q3-Q4 2024 suggests any surplus volumes are limited..· Surge in shipments from Russia to Turkey at end-2024 curbs that country’s role as outlet for surplus supplies from Europe at year-end.· Europe’s Group I export price premium versus VGO and versus other markets like India remain well above levels in Q1 2024.· Firmer base oils differentials add to signs of smaller supply-build even with more limited access to markets like Turkey.· Base oils differentials hold at firmer levels even as additional supplies move from Turkey to Europe at end-2024..· Shipments highlight attraction of tapping Europe’s steep Group I price premium to Turkey’s imported cargo prices.· Shipments point to ongoing demand for Group I base oils in Europe even at year-end..· Europe’s Group I base oils supply stays relatively steady in first eleven months of 2024..· Steady supply contrasts with more volatile supply of Group II and Group III base oils.· Steady supply could boost attraction of slowing any switch away from Group I base oils..· Europe’s Group II base oils supply could face more manageable surplus early this year following sustained dip in US exports to Europe at end-2024.· US base oils exports to Europe fall in Q4 2024 to lowest in at least a decade..· Drop in shipments cushions impact of seasonal slowdown in demand and prospect of higher regional Group II base oils output in Europe early this year vs Q1 2024.· Drop in shipments adds to signs that US' removal of surplus supplies at end-2024 had more limited impact than usual on key overseas outlets like Europe..Americas/EMEA base oils demand outlook: Week of 17 Feb.Asia base oils supply outlook: Week of 17 Feb.Global base oils margins outlook: Week of 17 Feb.Global base oils cargo flows: Week of 17 Feb.Global base oils arb outlook: Week of 17 Feb.US Dec base oil exports to S America fall.US’ December base oils imports fall
