· US domestic Group II base oils price premium to feedstock prices holds at more elevated levels.· Firm base oils margins incentivize refiners to maintain higher production levels.· Outright US domestic Group II prices fall in April 2025, at a time of year when prices typically hold steady or rise.· Lower prices point to ongoing surplus supply.· Any ongoing surplus supply would coincide with seasonal rise in demand and round of plant maintenance work.· Signs of ongoing surplus suggest rise in demand is more muted than usual.· Removal of surplus supply in overseas markets could get more complicated amid recent drop in FOB Asia cargo prices.· Any further fall in FOB Asia cargo prices would boost feasibility of lining up arbitrage shipments from Asia rather than from US to markets like Latin America..· US’ tighter availability of Group II light grades and healthier availability of heavy grades contrasts with Asia’s tighter availability of heavy grades and plentiful availability of light grades.· US’ growing share of Pakistan’s Group II heavy-grade base oils imports reflects repercussion of that dynamic..· Dynamic could similarly incentivize moves for Asia suppliers to target Americas market with surplus light-grade base oils.· Such a scenario could become more attractive amid likely seasonal slowdown in Asia’s base oils demand in coming months..· US Group III base oils supply from Asia could dip in coming weeks amid signs of slowdown in shipments from South Korea.· Slowdown would follow pick-up in South Korea’s exports to US in Feb-March 2025..· Pick-up in shipments likely to boost US’ Group III supplies at start of Q2 2025.· Signs of slowdown in South Korea’s exports to US so far in April 2025 would precede plant maintenance in South Korea later in Q2 2025.· Any sustained slowdown in shipments would provide opportunity for suppliers from Middle East to fill any shortfall and expand their share of US market. · Scheduled Group III plant maintenance in the Middle East in Q2 2025 could complicate any such moves.· Overlapping plant maintenance in Middle East and Asia could instead trigger sharper slowdown in Group III shipments to US..· Europe’s base oils prices hold firm vs feedstock/competing fuel prices.· Firm margins incentivize refiners to raise or maintain higher output.· Europe’s Group I export prices hold at premium or at narrow discount to domestic prices..· Narrow gap between export and domestic prices points to still-limited surplus availability of Group I base oils.· Tighter regional availability shows signs of curbing flows to other markets like southeast Asia, where Group I supply is also unusually tight..· Europe’s Group II base oils supply shows signs of healthy availability from regional and overseas sources.· Europe Group II base oils prices strengthen vs VGO, vs Group I prices and vs US and Asia prices in H2 April 2025..· Europe’s Group II price-strength points to firm supply-demand fundamentals, incentivizes overseas suppliers to eye Europe as increasingly attractive outlet for surplus cargoes.· Regional demand would need to be sufficiently strong to absorb any such additional shipments.· Alternative could be rise in surplus supplies..· Europe’s Group III base oils supply could tighten in coming months because of overlapping plant maintenance in Asia, Middle East and North America.· Europe Group III prices hold steadier-to-firmer vs Group II prices, vs US prices and vs VGO in recent weeks..· Steady-to-firmer price differentials could reflect more balanced supply-demand fundamentals..S Korea’s March exports to US edge down.Americas/EMEA base oils demand outlook: Week of 21 April.Asia base oils supply outlook: Week of 21 April.Global base oils margins outlook: Week of 21 April.Global base oils arb outlook: Week of 21 April
· US domestic Group II base oils price premium to feedstock prices holds at more elevated levels.· Firm base oils margins incentivize refiners to maintain higher production levels.· Outright US domestic Group II prices fall in April 2025, at a time of year when prices typically hold steady or rise.· Lower prices point to ongoing surplus supply.· Any ongoing surplus supply would coincide with seasonal rise in demand and round of plant maintenance work.· Signs of ongoing surplus suggest rise in demand is more muted than usual.· Removal of surplus supply in overseas markets could get more complicated amid recent drop in FOB Asia cargo prices.· Any further fall in FOB Asia cargo prices would boost feasibility of lining up arbitrage shipments from Asia rather than from US to markets like Latin America..· US’ tighter availability of Group II light grades and healthier availability of heavy grades contrasts with Asia’s tighter availability of heavy grades and plentiful availability of light grades.· US’ growing share of Pakistan’s Group II heavy-grade base oils imports reflects repercussion of that dynamic..· Dynamic could similarly incentivize moves for Asia suppliers to target Americas market with surplus light-grade base oils.· Such a scenario could become more attractive amid likely seasonal slowdown in Asia’s base oils demand in coming months..· US Group III base oils supply from Asia could dip in coming weeks amid signs of slowdown in shipments from South Korea.· Slowdown would follow pick-up in South Korea’s exports to US in Feb-March 2025..· Pick-up in shipments likely to boost US’ Group III supplies at start of Q2 2025.· Signs of slowdown in South Korea’s exports to US so far in April 2025 would precede plant maintenance in South Korea later in Q2 2025.· Any sustained slowdown in shipments would provide opportunity for suppliers from Middle East to fill any shortfall and expand their share of US market. · Scheduled Group III plant maintenance in the Middle East in Q2 2025 could complicate any such moves.· Overlapping plant maintenance in Middle East and Asia could instead trigger sharper slowdown in Group III shipments to US..· Europe’s base oils prices hold firm vs feedstock/competing fuel prices.· Firm margins incentivize refiners to raise or maintain higher output.· Europe’s Group I export prices hold at premium or at narrow discount to domestic prices..· Narrow gap between export and domestic prices points to still-limited surplus availability of Group I base oils.· Tighter regional availability shows signs of curbing flows to other markets like southeast Asia, where Group I supply is also unusually tight..· Europe’s Group II base oils supply shows signs of healthy availability from regional and overseas sources.· Europe Group II base oils prices strengthen vs VGO, vs Group I prices and vs US and Asia prices in H2 April 2025..· Europe’s Group II price-strength points to firm supply-demand fundamentals, incentivizes overseas suppliers to eye Europe as increasingly attractive outlet for surplus cargoes.· Regional demand would need to be sufficiently strong to absorb any such additional shipments.· Alternative could be rise in surplus supplies..· Europe’s Group III base oils supply could tighten in coming months because of overlapping plant maintenance in Asia, Middle East and North America.· Europe Group III prices hold steadier-to-firmer vs Group II prices, vs US prices and vs VGO in recent weeks..· Steady-to-firmer price differentials could reflect more balanced supply-demand fundamentals..S Korea’s March exports to US edge down.Americas/EMEA base oils demand outlook: Week of 21 April.Asia base oils supply outlook: Week of 21 April.Global base oils margins outlook: Week of 21 April.Global base oils arb outlook: Week of 21 April
