· Diesel values stay unusually high versus crude oil prices.· Firm values contrast with lower-than-usual base oils prices versus diesel.· Squeezed margins incentivize refiners to cover term volumes only, redirect any surplus feedstock back into diesel pool.· Plant maintenance in US and Brazil likely to limit surplus availability of Group I base oils during Q4 2023.· Lack of scheduled US Group II plant maintenance-work raises prospect of higher supply unless refiners cut runs/redirect light grades back into diesel pool.· US supply could get further boost from destocking as Atlantic hurricane season moves to end of peak period.· Any such boost likely to be more limited amid signs refiners and blenders built up smaller supply buffer ahead of/during hurricane season.· Signs of more arbitrage flows from US to West Africa suggest refiners continue to prioritize removal of surplus supplies over maximising price of the supplies.· Those moves would need to extend through Q4 2023 to sustain supply-demand balance..· South Korea’s August base oils exports to Americas rise to three-month high after sharp slowdown in June and July..· Pick-up in flows coincides with increasingly firm US Group III prices relative to other regions, especially Europe..· Widening premium incentivizes Group III refiners to move more supplies to US..· China continues to move steady volume of supplies to Latin America and to Europe in August..· Volume remains at low levels that are unlikely to have major impact on other suppliers..· Europe’s Group I base oils supply likely to get lift from gradual pick-up in output in Italy.· Europe’s Group II base oils supply gets boost from steady flows from US.· Europe’s Group III base oils supply gets boost from pick-up in regional flows, sees signs of slowdown in shipments from Mideast Gulf in Sept and Oct 2023.· Europe’s supply likely to improve as regional demand starts to ease in coming weeks.· Trend would contrast with earlier this year.· Europe’s base oils supply lagged demand in June for first time in four months, tightening availability ahead of Q3 2023..· Low base oils values versus feedstock and diesel prices in Q3 2023 deter refiners from raising output, raising prospect of tighter supply extending through the third quarter..· Italy’s base oils stocks stabilize in July at eleven-month low amid still-low domestic base oils output..· Italy’s low base oils stocks likely to slow any immediate pick-up in large volumes of spot shipments when domestic production returns to normal.· But stocks remain well above levels in mid-2022, raising prospect of speedier recovery when normal production resumes.· Availability of shipments from Italy to Africa likely to revive in coming months, with Europe likely to struggle to absorb rising supplies..· Steadier supplies in Italy coincide with revival in UK’s base oils output in July..· Trend eases any Group I supply-tightness in Europe, raises prospect of more shipments available for outlets like Africa in coming months..· Europe’s July Group III base oils supply falls to five-month low as slump in Mideast Gulf shipments counters rising volumes from Spain..· Europe’s Group III supplies from Mideast Gulf show signs of rising in August, before easing in September and October..· Europe’s July base oils imports fall to multi-year low on slide in premium-grade shipments from US and Mideast Gulf..· Fall in shipments helps to balance out seasonal slowdown in regional demand during summer months.· Supplies from US to Europe also show signs of holding firm in September..· Global premium-grade base oils imports from UAE fall to five-month low in July..· Slowdown coincides with slack demand and weak prices in US and especially Europe.· Shipment of more supplies from UAE to India revives India’s role as outlet for surplus supplies.· That role may change over coming year as new production capacity in India starts to come online..· Slowdown in premium-grade shipments from UAE this year contrast with rising supplies from Bahrain..Global base oils - week of Oct 2: Demand outlook
· Diesel values stay unusually high versus crude oil prices.· Firm values contrast with lower-than-usual base oils prices versus diesel.· Squeezed margins incentivize refiners to cover term volumes only, redirect any surplus feedstock back into diesel pool.· Plant maintenance in US and Brazil likely to limit surplus availability of Group I base oils during Q4 2023.· Lack of scheduled US Group II plant maintenance-work raises prospect of higher supply unless refiners cut runs/redirect light grades back into diesel pool.· US supply could get further boost from destocking as Atlantic hurricane season moves to end of peak period.· Any such boost likely to be more limited amid signs refiners and blenders built up smaller supply buffer ahead of/during hurricane season.· Signs of more arbitrage flows from US to West Africa suggest refiners continue to prioritize removal of surplus supplies over maximising price of the supplies.· Those moves would need to extend through Q4 2023 to sustain supply-demand balance..· South Korea’s August base oils exports to Americas rise to three-month high after sharp slowdown in June and July..· Pick-up in flows coincides with increasingly firm US Group III prices relative to other regions, especially Europe..· Widening premium incentivizes Group III refiners to move more supplies to US..· China continues to move steady volume of supplies to Latin America and to Europe in August..· Volume remains at low levels that are unlikely to have major impact on other suppliers..· Europe’s Group I base oils supply likely to get lift from gradual pick-up in output in Italy.· Europe’s Group II base oils supply gets boost from steady flows from US.· Europe’s Group III base oils supply gets boost from pick-up in regional flows, sees signs of slowdown in shipments from Mideast Gulf in Sept and Oct 2023.· Europe’s supply likely to improve as regional demand starts to ease in coming weeks.· Trend would contrast with earlier this year.· Europe’s base oils supply lagged demand in June for first time in four months, tightening availability ahead of Q3 2023..· Low base oils values versus feedstock and diesel prices in Q3 2023 deter refiners from raising output, raising prospect of tighter supply extending through the third quarter..· Italy’s base oils stocks stabilize in July at eleven-month low amid still-low domestic base oils output..· Italy’s low base oils stocks likely to slow any immediate pick-up in large volumes of spot shipments when domestic production returns to normal.· But stocks remain well above levels in mid-2022, raising prospect of speedier recovery when normal production resumes.· Availability of shipments from Italy to Africa likely to revive in coming months, with Europe likely to struggle to absorb rising supplies..· Steadier supplies in Italy coincide with revival in UK’s base oils output in July..· Trend eases any Group I supply-tightness in Europe, raises prospect of more shipments available for outlets like Africa in coming months..· Europe’s July Group III base oils supply falls to five-month low as slump in Mideast Gulf shipments counters rising volumes from Spain..· Europe’s Group III supplies from Mideast Gulf show signs of rising in August, before easing in September and October..· Europe’s July base oils imports fall to multi-year low on slide in premium-grade shipments from US and Mideast Gulf..· Fall in shipments helps to balance out seasonal slowdown in regional demand during summer months.· Supplies from US to Europe also show signs of holding firm in September..· Global premium-grade base oils imports from UAE fall to five-month low in July..· Slowdown coincides with slack demand and weak prices in US and especially Europe.· Shipment of more supplies from UAE to India revives India’s role as outlet for surplus supplies.· That role may change over coming year as new production capacity in India starts to come online..· Slowdown in premium-grade shipments from UAE this year contrast with rising supplies from Bahrain..Global base oils - week of Oct 2: Demand outlook