· Europe Group III base oils price trends higher vs prices in US and Asia over past two months..· Europe Group III price trends higher vs domestic Group I price and VGO, holds firm vs domestic Group II price..· Europe’s firmer Group III price differentials could reflect correction following sustained weakness.· Simultaneous improvement in Europe’s Group III price vs other base oils groups, vs other regions and vs feedstock prices suggests recent price strength points to other factors in addition to a price correction..· Europe’s Group III base oils price differential strengthens vs ex-tank China prices by end-April 2025 to firmest level in more than six months..· Stronger Europe Group III price differential follows surge in China’s Group III base oils output to multi-year high in March 2025.· Higher output adds to sustained rise in China’s Group III output since start of H2 2024..· China’s rising Group III output coincides with muted economic growth even before start of trade war with US.· China’s domestic Group III price duly weakens vs Group II prices and vs overseas prices, cutting attraction of moving more Group III base oils to the country..· Europe’s Group III price differential strengthens vs US Group III prices since early-March 2025.· Improving price-differential points to firmer supply-demand fundamentals in Europe vs US.· Firmer fundamentals in Europe could suggest scheduled Group III plant maintenance in Middle East in Q2 2025 is set to have larger impact on supply in Europe than in US.· But US is largest importer of Group III base oils from Bahrain and UAE..· Dynamic suggests US is likely to face similar or larger impact than Europe from any drop in supplies from Middle East..· Firmer fundamentals in Europe could point to tighter supply from other sources.· South Korea’s base oils exports to Europe fall in Q1 2025 to lowest since H2 2023..· Slowdown from South Korea coincides with low shipments of premium-grade base oils from Spain to northwest Europe in Q1 2025 for second straight quarter..· Premium-grade exports from Spain to northwest Europe then rebound to nine-month high in April 2025.· Firmer fundamentals in Europe could reflect improvement in demand even amid still-weak outright lube consumption.· Europe Group III 4cSt (low) price premium to Group II N150 extends fall at end-2024, before slipping to discount to N150 in Feb-March 2025..· Increasingly similar price levels over extended period boost incentive for blenders to use more Group III base oils.· Any impact of tariff wars also more likely to impact Group II base oils, of which US is a key supplier, rather than Group III base oils, whose suppliers are outside the US.· Any such concerns could further boost demand for Group III base oils.· Europe Group III base oils prices remain unusually weak relative to other base oils groups and feedstock prices.· Recent improvement in Group III price differentials suggest some of the factors driving that weakness are starting to ease or reverse..Global base oils margins outlook: Week of 5 May.Asia base oils demand outlook: Week of 5 May.Asia base oils supply outlook: Week of 5 May.Europe’s Feb Group III supply edges up.Asia’s Group III imports from Middle East rise in March
· Europe Group III base oils price trends higher vs prices in US and Asia over past two months..· Europe Group III price trends higher vs domestic Group I price and VGO, holds firm vs domestic Group II price..· Europe’s firmer Group III price differentials could reflect correction following sustained weakness.· Simultaneous improvement in Europe’s Group III price vs other base oils groups, vs other regions and vs feedstock prices suggests recent price strength points to other factors in addition to a price correction..· Europe’s Group III base oils price differential strengthens vs ex-tank China prices by end-April 2025 to firmest level in more than six months..· Stronger Europe Group III price differential follows surge in China’s Group III base oils output to multi-year high in March 2025.· Higher output adds to sustained rise in China’s Group III output since start of H2 2024..· China’s rising Group III output coincides with muted economic growth even before start of trade war with US.· China’s domestic Group III price duly weakens vs Group II prices and vs overseas prices, cutting attraction of moving more Group III base oils to the country..· Europe’s Group III price differential strengthens vs US Group III prices since early-March 2025.· Improving price-differential points to firmer supply-demand fundamentals in Europe vs US.· Firmer fundamentals in Europe could suggest scheduled Group III plant maintenance in Middle East in Q2 2025 is set to have larger impact on supply in Europe than in US.· But US is largest importer of Group III base oils from Bahrain and UAE..· Dynamic suggests US is likely to face similar or larger impact than Europe from any drop in supplies from Middle East..· Firmer fundamentals in Europe could point to tighter supply from other sources.· South Korea’s base oils exports to Europe fall in Q1 2025 to lowest since H2 2023..· Slowdown from South Korea coincides with low shipments of premium-grade base oils from Spain to northwest Europe in Q1 2025 for second straight quarter..· Premium-grade exports from Spain to northwest Europe then rebound to nine-month high in April 2025.· Firmer fundamentals in Europe could reflect improvement in demand even amid still-weak outright lube consumption.· Europe Group III 4cSt (low) price premium to Group II N150 extends fall at end-2024, before slipping to discount to N150 in Feb-March 2025..· Increasingly similar price levels over extended period boost incentive for blenders to use more Group III base oils.· Any impact of tariff wars also more likely to impact Group II base oils, of which US is a key supplier, rather than Group III base oils, whose suppliers are outside the US.· Any such concerns could further boost demand for Group III base oils.· Europe Group III base oils prices remain unusually weak relative to other base oils groups and feedstock prices.· Recent improvement in Group III price differentials suggest some of the factors driving that weakness are starting to ease or reverse..Global base oils margins outlook: Week of 5 May.Asia base oils demand outlook: Week of 5 May.Asia base oils supply outlook: Week of 5 May.Europe’s Feb Group III supply edges up.Asia’s Group III imports from Middle East rise in March
