· US base oils price premium to feedstock/competing fuel prices extends fall.· Lower price premium contrasts with recent improvement in US diesel premium to crude oil.· Extension of that trend would boost incentive for refiners to adjust base oils output and boost diesel production.· Market faces prospect of typical, rapid build-up of surplus supplies at year-end and start of new year without any adjustment to output..· Build-up of surplus US supplies in Q4 2024 could be smaller than expected if market extends recent supply, demand and price trends.· Earlier-than-usual drop in US export prices boost competitiveness of US supplies earlier than usual.· Weak US Group III prices relative to other markets cut attraction of moving more shipments to US from overseas markets like Middle East.· High exports and low imports counter impact of firm base oils output in Aug 2024, leaving net supply lagging domestic demand..· Export prices would need to stay competitive, and Group III prices at steep discounts to other markets to extend that pattern through Q4 2024.· Any deviation from that pattern would trigger a supply-build without an adjustment in domestic base oils output to compensate.· An adjustment in domestic base oils output would in turn ease pressure on the need to continue to clear large volumes through the export market.· Base oils margins remain at levels for now that limit pressure on refiners to adjust output like that.· Swathe of overseas shipments of Group III base oils from Asia and Middle East expected to reach US in Nov 2024, especially over the coming week.· Exports would need to rise sharply, or output fall, to compensate for pick-up in imports. · Shipments from US head to India in early Sept 2024 and early Oct 2024.· Pattern shows signs of pausing so far in Nov 2024..· Europe’s Group I base oils supply faces build-up of surplus volumes because of slowdown in demand rather than rise in regional production.· Structurally-lower production capacity, combined with plant maintenance in Q4 2024 and shipments to southeast Asia, could limit size of supply-build.· Europe’s Group II base oils supply likely to stay readily available amid signs of steady regional output and plentiful flows from US.· Wider Europe Group II premium to US prices sustains attraction of moving more US shipments to the region.· Netherlands’ base oils output reverts to more typical levels in Aug 2024 following unusual spike in production in July 2024..· Still-firm output and high imports support Europe’s Group II base oils supply at high levels in Aug 2024, even if down from previous month..· Europe’s Group II and Group III base oils supply accounts for larger-than-usual share of Europe’s base oils supply in Aug 2024..· Europe’s Group I base oils prices weaken versus Group II and Group III base oils during most of Q3 2024 even with rising supply/market share of premium-grade base oils.· Dynamic could suggest that seasonal fall in lube demand in summer months had biggest impact on Group I base oils market.· Such a scenario would highlight region’s shrinking consumption of Group I base oils.· Dynamic could instead suggest that Group I prices better reflected impact of weaker lube demand.· Such a scenario raises prospect of Group II/III prices facing more pressure than Group I base oils to respond to weaker lube demand..· Europe’s Group III base oils supplies could be more mixed.· Pause in large shipments of premium-grade base oils from Spain extends to a month.· Pause in shipments coincides with plant maintenance work in Spain.· Pause in shipments could tighten availability in Europe of Group III supplies with full set of OEM approvals.· Exports of premium-grade base oils from Indonesia slump in Sept 2024, with pause in shipments to Europe..· Pause in shipments could tighten further the availability in Europe of supplies with full set of OEM approvals at start of Q4 2024.· Cargo loads from Indonesia at end-Oct 2024 before heading to Europe, set to arrive around mid-Dec 2024..· Singapore ships larger-than-usual cargo to UAE in past week.· Shipment is third such larger cargo from Singapore to UAE in H2 2024, with no such shipments in previous year to mid-June 2024.· All three shipments consist of re-exports of supplies that originated from outside Singapore..Americas/EMEA base oils demand outlook: Week of 11 Nov.Asia base oils supply outlook: Week of 11 Nov.Global base oils margins outlook: Week of 11 Nov.Global base oils cargo flows: Week of 11 Nov.US’ August base oils supply falls.Netherlands’ Aug base oils output falls
· US base oils price premium to feedstock/competing fuel prices extends fall.· Lower price premium contrasts with recent improvement in US diesel premium to crude oil.· Extension of that trend would boost incentive for refiners to adjust base oils output and boost diesel production.· Market faces prospect of typical, rapid build-up of surplus supplies at year-end and start of new year without any adjustment to output..· Build-up of surplus US supplies in Q4 2024 could be smaller than expected if market extends recent supply, demand and price trends.· Earlier-than-usual drop in US export prices boost competitiveness of US supplies earlier than usual.· Weak US Group III prices relative to other markets cut attraction of moving more shipments to US from overseas markets like Middle East.· High exports and low imports counter impact of firm base oils output in Aug 2024, leaving net supply lagging domestic demand..· Export prices would need to stay competitive, and Group III prices at steep discounts to other markets to extend that pattern through Q4 2024.· Any deviation from that pattern would trigger a supply-build without an adjustment in domestic base oils output to compensate.· An adjustment in domestic base oils output would in turn ease pressure on the need to continue to clear large volumes through the export market.· Base oils margins remain at levels for now that limit pressure on refiners to adjust output like that.· Swathe of overseas shipments of Group III base oils from Asia and Middle East expected to reach US in Nov 2024, especially over the coming week.· Exports would need to rise sharply, or output fall, to compensate for pick-up in imports. · Shipments from US head to India in early Sept 2024 and early Oct 2024.· Pattern shows signs of pausing so far in Nov 2024..· Europe’s Group I base oils supply faces build-up of surplus volumes because of slowdown in demand rather than rise in regional production.· Structurally-lower production capacity, combined with plant maintenance in Q4 2024 and shipments to southeast Asia, could limit size of supply-build.· Europe’s Group II base oils supply likely to stay readily available amid signs of steady regional output and plentiful flows from US.· Wider Europe Group II premium to US prices sustains attraction of moving more US shipments to the region.· Netherlands’ base oils output reverts to more typical levels in Aug 2024 following unusual spike in production in July 2024..· Still-firm output and high imports support Europe’s Group II base oils supply at high levels in Aug 2024, even if down from previous month..· Europe’s Group II and Group III base oils supply accounts for larger-than-usual share of Europe’s base oils supply in Aug 2024..· Europe’s Group I base oils prices weaken versus Group II and Group III base oils during most of Q3 2024 even with rising supply/market share of premium-grade base oils.· Dynamic could suggest that seasonal fall in lube demand in summer months had biggest impact on Group I base oils market.· Such a scenario would highlight region’s shrinking consumption of Group I base oils.· Dynamic could instead suggest that Group I prices better reflected impact of weaker lube demand.· Such a scenario raises prospect of Group II/III prices facing more pressure than Group I base oils to respond to weaker lube demand..· Europe’s Group III base oils supplies could be more mixed.· Pause in large shipments of premium-grade base oils from Spain extends to a month.· Pause in shipments coincides with plant maintenance work in Spain.· Pause in shipments could tighten availability in Europe of Group III supplies with full set of OEM approvals.· Exports of premium-grade base oils from Indonesia slump in Sept 2024, with pause in shipments to Europe..· Pause in shipments could tighten further the availability in Europe of supplies with full set of OEM approvals at start of Q4 2024.· Cargo loads from Indonesia at end-Oct 2024 before heading to Europe, set to arrive around mid-Dec 2024..· Singapore ships larger-than-usual cargo to UAE in past week.· Shipment is third such larger cargo from Singapore to UAE in H2 2024, with no such shipments in previous year to mid-June 2024.· All three shipments consist of re-exports of supplies that originated from outside Singapore..Americas/EMEA base oils demand outlook: Week of 11 Nov.Asia base oils supply outlook: Week of 11 Nov.Global base oils margins outlook: Week of 11 Nov.Global base oils cargo flows: Week of 11 Nov.US’ August base oils supply falls.Netherlands’ Aug base oils output falls
