· US base oils supply could stay tighter at start of Q3 2025 after plant-maintenance work in domestic and overseas markets cuts availability in Q2 2025.· US base oils supply lags demand in April 2025 for third month, cutting stocks to eight-month low..· Persistent supply-shortfall triggers fastest drop in stocks over three-month period since September 2020, when US was in midst of Covid-related supply disruptions..· Plant-maintenance work in May-June 2025 likely keeps output lower than usual through rest of Q2 2025.· Plant-maintenance work in Middle East and Asia in Q2 2025 coincides with signs of slowdown in shipments reaching US in May-July 2025.· Lower output and imports could push back any recovery in base oils supply until several weeks into Q3 2025.· US Group II export prices show diverging signals, with firm margins reflecting tighter fundamentals in recent months.· Firm margins contrast with US Group II heavy-grade export prices that maintain steep discount to India/Europe prices in Q2 2025 and start of Q3 2025..· Wide price-discount sustains feasibility of arbitrage shipments.· Steady base oils margins, combined with wide price-discount to other markets, could point to concern about build-up of surplus supply and preference to clear such volumes quickly..· Latin America’s base oils supply could stay at healthy levels amid signs of steady-to-high shipments from US to the region in Q2 2025.· Brazil’s base oils supply stays unusually high in May 2025 for second month, reflecting that pick-up in shipments from US..· Brazil’s base oils imports from US rise to six-month high in May 2025, even amid slump in US base oils output at start of Q2 2025..· Wave of shipments from US, even during round of plant-maintenance work, points to Latin American markets like Brazil as priority outlets for US suppliers.· Brazil’s infrequent shipment of large export cargo in May 2025 points to sufficient supply..· Dynamic raises risk of mismatch between supply and demand if US exports to Brazil remain at more elevated levels..· Argentina’s Group I base oils output stays higher than usual in May 2025 even as exports pause..· Output could hold at more elevated levels to tap blenders’ concern about strength of domestic lube demand, boosting their incentive to procure smaller volumes more frequently from local sources.· Output could hold at more elevated levels to take advantage of tight Group I fundamentals in overseas markets.· Any change in either of those factors could prompt adjustment in output to avoid build-up of surplus volumes..· Europe’s Group I base oils supply likely to extend recovery in coming weeks as plant-maintenance draws to close and demand slows.· Demand could face further pressure after slump in supply in early-Q2 2025 incentivizes blenders to switch to other base oils grades instead.· Some of those blenders could continue to use those other grades even after recovery in Group I supply.· Size of recent drop in Group I supply highlights Europe’s dwindling number of Group I plants and larger impact of any drop in output from remaining plants.· Europe’s Group I base oils supply falls to seventeen-month low in April 2025..· Timing of fall in supply, at time of year when demand faces seasonal rise, compounds impact of tighter availability.· Group I supply, less exports to markets outside Europe, falls even more sharply in April 2025, compounding tight regional availability..· Drop in supply highlights Italy’s reliance on sole Group I unit in that country and regionwide impact of any change in production at the unit.· Drop in supply, combined with uncompetitive Group I prices for export markets, provide additional incentive for overseas buyers to turn to other sources to cover their requirements..· Europe’s Group II base oils supply likely to hold steady, extending that trend since late last year.· Steady supply contrasts with dip in Group I base oils supply, especially at start of Q2 2025.· Steady supply leaves Group II base oils accounting for around 50% of total Group I/Group II supply in April 2025, up from less than 25% share in April 2024..· Steady supply boosts Group II share of Europe’s Group I/Group II supply in Jan-April 2025..· Any extension of steady Group II supply, combined with recovery in Group I base oils supply, could trigger pick-up in surplus volumes..· Europe’s Group III base oils supply could stay mixed.· Supplies with full set of OEM approvals could stay tighter amid pause in flows from Spain through most of June 2025.· Shipment of cargo to northwest Europe in early-July 2025 is first in a month.· Repeat of such shipments would point to resumption of more regular flows from Spain. · Supplies without full set of approvals could get boost amid signs of pick-up in shipments from Middle East to Europe.· Dip in Group III supply at start of Q2 2025 coincides with drop in Group II and especially Group I base oils supply..· Simultaneous and steeper drop in Group I and Group III base oils supply adds to incentive for blenders to use more Group II base oils instead..Americas/EMEA base oils demand outlook: Week of 7 July.Global base oils margins outlook: Week of 7 July.Global base oils arb outlook: Week of 7 July.US’ April base oils supply lags demand .Brazil’s May base oils supply matches demand .Argentina’s May base oils supply rises.UK’s April base oils output falls.Netherlands’ April base oils output rises
