· Europe’s Group II base oils prices hold in narrow range vs Group I prices in first two months of 2025..· Europe Group II prices flip to premium to Europe Group III 4cSt (low) prices in Feb 2025 for first time since mid-2021..· Relative price-strength of Group II base oils points to firm supply-demand fundamentals vs Group I and Group III base oils.· Group I base oils account for around 40% of Europe’s paraffinic base oils supply in 2024, staying similar to year-earlier levels.· Group II supply share edges higher in 2024 but stays much lower than Group I..· Group II’s still-lower share in 2024 points to manageable supply..· Lower share masks surge in Europe Group II supply and market share in H2 2024.· Rising supply and market share contrasts with fall in Group I supply and market share in H2 2024.· Group II base oils supply duly matches Group I supply in Q4 2024 for first time..· Group I base oils export prices hold at levels in Q1 2025 that keep arbitrage shut to markets like Middle East..· Closed arbitrage adds to signs of smaller-than-usual Group I supply surplus in Europe at start of 2025..· Europe Group II base oils prices hold in narrow range in Q1 2025 at levels that make less attractive the flow of arbitrage shipments from markets like US and Asia..· Less attractive arbitrage adds to signs of healthier availability of Group II base oils in Europe at start of 2025..· Europe’s Group II base oils supply from regional sources likely to hold firmer early this year vs H1 2024, when plant maintenance work slashed output..· Firmer supply from regional sources adds to importance of prices staying at levels that deter additional shipments from overseas markets.· Strength of Europe Group II base oils prices vs Group I and Group III prices so far this year points to firm supply-demand fundamentals vs the other grades.· Supply fundamentals late last year and early this year instead suggest that Group I supply is tighter than usual, with Group II supply more readily available.· Dynamic could suggest that demand is key determinant supporting strength of Europe Group II base oils vs Group I and Group III prices.· Dynamic could alternatively suggest that Group II imports are likely to fall early this year, balancing out higher regional output vs year-earlier levels.· Dynamic could also suggest that price gap between Group II base oils and Group I base oils is set to face pressure to narrow.· Europe Group II base oils price premium to Group I base oils duly narrows in early-March 2025..Global base oils margins outlook: Week of 10 March.Asia base oils demand outlook: Week of 10 March.Asia base oils supply outlook: Week of 10 March.Netherlands’ Dec base oils output rises.UK’s December base oils output falls.Europe Dec Grp III base oils supply falls.Base Oil News stories and analyses also available on the ICIS platform
