· Diesel prices maintain steep premium to crude oil amid tight middle distillates supply.· Firm diesel values incentivize refiners to focus on middle distillates output, minimize surplus output of base oils.· Americas Group I supply set to tighten in coming weeks because of overlapping maintenance work in US and Brazil.· US Group II light-grade supply could tighten as refiners make more money producing diesel instead.· US base oils supply-build in Q3 2023 likely to be more limited amid plant maintenance work and firm export flows..· US’ July base oils exports to Latin America rise to highest in more than eight years on sustained surge in shipments to Brazil and Argentina..· Rise in shipments taps region’s firm lube demand and takes advantage of US’ more competitive base oils prices this year.· Rise in shipments provides valuable outlet for US suppliers to clear surplus volumes and curb supply-build in domestic market.· Besides Brazil and Argentina, US’ exports to most other Latin American markets fall in first seven months of 2023.· Trend partly reflects weaker demand in those markets.· Trend also coincides with ongoing flow of arbitrage supplies of heavy grades from Asia to the region, even if volume is smaller than last year..· Rising base oils shipments from Saudi Arabia in three months to August coincide with/help to cover for slowdown in base oil exports from South Korea.· Signs of slowdown in shipments from Saudi Arabia in September would coincide with dip in arbitrage flows from US to India..· Europe’s Group I supply tightness could ease in coming months following expected restart of base oils unit in Italy.· Europe’s Group II supply likely to get boost from wave of US shipments to region in September.· Less attractive arbitrage could curb flow of large volumes from US to Europe over coming months.· Italy’s July base oils exports fall to seventeen-month low, reflecting impact of extended plant maintenance work..· Lower exports cut supply-build in Europe in Q3 2023, slash flow of shipments to Africa.· Drop in flows to Africa coincides with slump in shipments from UK to Africa in July, increasing need for region to turn to other suppliers to cover requirements.· Flow of shipments from Europe to Africa likely to stay more volatile as production disruptions and firm European demand curb surplus supply..· South Korea’s August base oil exports to Europe fall to seven-month low on sustained slowdown in Group III shipments to the region..· Lower volumes curb Group III flows from Asia to Europe, raising prospect of easing supply overhang in that market..Global base oils - week of Sep 25: Price outlook - margins
· Diesel prices maintain steep premium to crude oil amid tight middle distillates supply.· Firm diesel values incentivize refiners to focus on middle distillates output, minimize surplus output of base oils.· Americas Group I supply set to tighten in coming weeks because of overlapping maintenance work in US and Brazil.· US Group II light-grade supply could tighten as refiners make more money producing diesel instead.· US base oils supply-build in Q3 2023 likely to be more limited amid plant maintenance work and firm export flows..· US’ July base oils exports to Latin America rise to highest in more than eight years on sustained surge in shipments to Brazil and Argentina..· Rise in shipments taps region’s firm lube demand and takes advantage of US’ more competitive base oils prices this year.· Rise in shipments provides valuable outlet for US suppliers to clear surplus volumes and curb supply-build in domestic market.· Besides Brazil and Argentina, US’ exports to most other Latin American markets fall in first seven months of 2023.· Trend partly reflects weaker demand in those markets.· Trend also coincides with ongoing flow of arbitrage supplies of heavy grades from Asia to the region, even if volume is smaller than last year..· Rising base oils shipments from Saudi Arabia in three months to August coincide with/help to cover for slowdown in base oil exports from South Korea.· Signs of slowdown in shipments from Saudi Arabia in September would coincide with dip in arbitrage flows from US to India..· Europe’s Group I supply tightness could ease in coming months following expected restart of base oils unit in Italy.· Europe’s Group II supply likely to get boost from wave of US shipments to region in September.· Less attractive arbitrage could curb flow of large volumes from US to Europe over coming months.· Italy’s July base oils exports fall to seventeen-month low, reflecting impact of extended plant maintenance work..· Lower exports cut supply-build in Europe in Q3 2023, slash flow of shipments to Africa.· Drop in flows to Africa coincides with slump in shipments from UK to Africa in July, increasing need for region to turn to other suppliers to cover requirements.· Flow of shipments from Europe to Africa likely to stay more volatile as production disruptions and firm European demand curb surplus supply..· South Korea’s August base oil exports to Europe fall to seven-month low on sustained slowdown in Group III shipments to the region..· Lower volumes curb Group III flows from Asia to Europe, raising prospect of easing supply overhang in that market..Global base oils - week of Sep 25: Price outlook - margins
