· US Group II base oils prices hold in narrow range vs VGO since mid-April 2025.· Steady price differentials contrast with surge in margins in Q2 2024.· Steadier margins so far in Q2 2025 coincide with time of year when supply-demand fundamentals are likely to be tighter than usual.· Supply-demand fundamentals now face prospect of easing following completion of most plant-maintenance work and ahead of likely slowdown in lube consumption during summer holidays.· Prospect of pick-up in surplus supply increases importance of sustaining high export volumes to limit build-up of surplus volumes.· Any such shipments could face growing competition from Asia where availability is also improving.· US domestic Group II N500/600 discount to Europe Group II N500 weakens even more to widest level since 2021..· Widening discount, and signs of firmer demand in Europe, boosts attraction of moving more heavy-grade supplies to that market..· US Group III base oils price rises at end-May 2025 for first time in more than two months as plant maintenance in Middle East and Asia tightens supply.· US Group III 4cSt price premium to Group II N100 rises but stays unusually narrow even with tighter supply..· Narrow Group III premium suggests supply-demand fundamentals remain weak even with tighter availability because of plant maintenance.· US Group III prices rise less sharply than Europe prices so far in Q2 2025, despite Europe facing less exposure to impact of plant maintenance in Middle East and Asia.· Supplies from Middle East and South Korea account for 85% of US Group III imports over past year.· For Europe, the share is less than 50%..· Latin America’s base oils supply likely to be sufficient for now as wave of US shipments reaches the region in early-Q2 2025.· Slower demand leaves those supplies lasting longer.· Brazil’s base oils imports rebound to five-month high in April 2025..· Rise in shipments and signs of steady domestic output contrast with weaker lube consumption.· Dynamic likely leaves sufficient supply even if plant-maintenance work in US curbs shipments from that market in April-May 2025.· Any round of stock-replenishment and pick-up in demand for supplies from US would then follow completion of most plant-maintenance work in US..· Argentina’s base oils stocks fall to eighteen-month low in April 2025..· Drawdown points to insufficient domestic supply as high export volumes outpace imports..· Dynamic suggests Argentina’s high base oils export volumes are unsustainable without pick-up in imports and without domestic output holding at elevated levels..· Europe’s base oils supply likely to stay mixed.· Europe’s Group III 4cSt (low) base oils price maintains steady premium to US prices, widening premium to Asia prices..· Firm premium points to stronger supply-demand fundamentals, incentivizes overseas refiners to move more supplies to Europe.· Firmer premium suggests Group III plant maintenance in Middle East has larger impact on Europe than on other regions like Asia, where demand typically peaks in month of March.· Europe’s premium-grade base oils imports from Middle East hold steady in Q1 2025, contrasting with surge in shipments to US and Asia..· Rise in shipments to US and Asia boosts stocks ahead of plant maintenance in Q2 2025.· Steady flows to Europe in Q1 2025 curb extent of any such stock-building..· Spain’s exports of premium-grade base oils to northwest Europe hold firm in May 2025 for third month..· Firm volumes from Spain help to sustain healthy availability of Group III base oils with full set of OEM approvals..· Europe’s Group II heavy-grade price-premium to light-grade base oils rises to highest level in almost six months.· Rising heavy-grade premium to light grades contrasts with narrowing heavy-grade premium to light grades in US, steadier premium in Asia..· Contrasting price trends point to diverging supply-demand dynamics for light and heavy grades in those various regions..· Europe’s Group II heavy-grade premium to US domestic price extends rise to highest since Q3 2021..· Widening premium boosts attraction of moving more US heavy-grade supplies to Europe.· Such a move and rise in supplies could help to cover pick-up in demand, limit room for rise in Europe’s heavy-grade prices..Brazil’s April lube demand falls.Argentina’s April base oils supply falls.Global premium-grade imports from Mideast rise in March.Global base oils arb outlook: Week of 2 June.Americas/EMEA base oils demand outlook: Week of 2 June.Asia base oils supply outlook: Week of 2 June
