· US base oils price premium to feedstock/competing fuel prices extends rise.· Rising premium implies strong supply-demand fundamentals, incentivizes refiners to maximise base oils output.· Supply likely to stay tighter until refiners/blenders are comfortable with their inventory levels.· Group II base oils supply could stay tighter following structural switch to produce more Group III base oils, and amid signs of more regular exports to overseas destinations like Singapore.· US Group III base oils imports from South Korea show signs of bottoming out in June 2024 before recovering in July and August 2024.· US base oils exports show signs of staying relatively low in H1 July 2024, following likely rise in shipments in June 2024.· A slowdown in pace of shipments could reflect logistical delays following recent hurricane as well as more limited availability.· Slowdown in pace of shipments coincides with rising US prices that leave unworkable the arbitrage to growing number of markets.· Tighter US supply and firm US prices boost attraction and feasibility of lining up Group II shipments from Asia to Americas market.· Shipment from South Korea set to reach Brazil in coming week after loading in H1 June 2024.· Shipment suggests some buyers are already actively lining up such arbitrage shipments.· Additional supplies from Asia to Latin America would help to cover for any supply disruptions in the US over the coming months.· Additional supplies from Asia to Latin America would add to surplus supply if there are no or limited supply disruptions in the US over the coming months..· Europe’s Group I base oils supply likely to get boost from completion of plant maintenance work, recent arrival of more supplies from US, and refiners’ focus on regional market rather than more distant outlets.· More supplies from Saudi Arabia set to reach Europe before end-July 2024.· Supply could get further support from prospect of seasonal slowdown in demand over coming weeks, while closed arbitrage limits options to clear any surplus volumes.· Europe’s Group II base oils supply likely to be readily available at start of Q3 2024 amid steady regional output and signs of firm imports from US in July 2024, after slowdown in June 2024. · Supply could get more support from firm regional Group II base oil margins, adding to incentive to maintain or raise regional output.· More readily-available supply would follow rebound in availability during Q2 2024, with base oils imports from US surging in May 2024 to highest in more than five years..· Rise in shipments would coincide with restart of regional Group II unit in April 2024 following scheduled maintenance work..· Europe’s Group III base oils supply likely to remain readily available amid steady flows from within the region and regular shipments from more distant markets.· Supply already remains sufficient during Q2 2024 as pick-up in supplies from Asia covers for plant maintenance work in Finland, leaving supply steady in May 2024..· Europe’s Group III base oils prices extend slide vs Group I and Group II prices throughout Q2 2024, soften vs Group III prices in other regions.· Price weakness suggests that supply is more than sufficient to meet demand in Q2 2024 even with seasonal rise in requirements.· Trend suggests that any rise in supply from levels in months of April and May would exceed demand.· Such a dynamic could materialize if US market continues to trim its Group III import requirements..· South Korea’s base oils exports to Belgium and Netherlands hold firm in Q2 2024 vs Q1 2024, surge vs Q2 2023..· Firm volumes from South Korea would coincide with steady flows to Europe from other Group III suppliers in Asia.· Steady volumes would coincide with typical seasonal slowdown in demand in Europe during third quarter..· Europe’s base oils supply for overseas markets outside the region could improve in Q3 2024 amid likely seasonal slowdown in regional demand.· Any improvement would follow fall in Europe’s total base oils exports to markets outside the region to five-month low in May 2024 amid dip in shipments from Italy and Netherlands..· Lower exports from Netherlands coincides with seasonal pick-up in regional demand in Q2 2024.· Lower exports from Italy follow closure of Group I plant.· Europe's base oils exports still rise 15% in May 2024 from year-earlier levels on pick-up in flows from Belgium, Netherlands and Spain.· All those markets are producers or distribution points for premium-grade base oils..· Supply surplus in the Middle East likely to shrink as shipments to the region extend slowdown.· Base oils exports from US, Europe and Asia to Middle East fall to five-month low in May 2024..· Slowdown likely to extend into June 2024, as South Korea’s base oils exports to the region fall to lowest since early 2022.· Sustained slowdown in shipments could trigger moves to replenish supplies, especially in view of time-lag between purchase and delivery of any shipments from markets like Asia.· Sustained slowdown could also reflect signs of pick-up in shipments from Saudi Arabia to UAE in recent months, curbing need for supplies from other regions..Americas/EMEA base oils demand outlook: Week of 22 July.Asia base oils supply outlook: Week of 22 July.Global base oils margins outlook: Week of 22 July.Global base oils arb outlook: Week of 22 July.Global base oils cargo flows: Week of 22 July
· US base oils price premium to feedstock/competing fuel prices extends rise.· Rising premium implies strong supply-demand fundamentals, incentivizes refiners to maximise base oils output.· Supply likely to stay tighter until refiners/blenders are comfortable with their inventory levels.· Group II base oils supply could stay tighter following structural switch to produce more Group III base oils, and amid signs of more regular exports to overseas destinations like Singapore.· US Group III base oils imports from South Korea show signs of bottoming out in June 2024 before recovering in July and August 2024.· US base oils exports show signs of staying relatively low in H1 July 2024, following likely rise in shipments in June 2024.· A slowdown in pace of shipments could reflect logistical delays following recent hurricane as well as more limited availability.· Slowdown in pace of shipments coincides with rising US prices that leave unworkable the arbitrage to growing number of markets.· Tighter US supply and firm US prices boost attraction and feasibility of lining up Group II shipments from Asia to Americas market.· Shipment from South Korea set to reach Brazil in coming week after loading in H1 June 2024.· Shipment suggests some buyers are already actively lining up such arbitrage shipments.· Additional supplies from Asia to Latin America would help to cover for any supply disruptions in the US over the coming months.· Additional supplies from Asia to Latin America would add to surplus supply if there are no or limited supply disruptions in the US over the coming months..· Europe’s Group I base oils supply likely to get boost from completion of plant maintenance work, recent arrival of more supplies from US, and refiners’ focus on regional market rather than more distant outlets.· More supplies from Saudi Arabia set to reach Europe before end-July 2024.· Supply could get further support from prospect of seasonal slowdown in demand over coming weeks, while closed arbitrage limits options to clear any surplus volumes.· Europe’s Group II base oils supply likely to be readily available at start of Q3 2024 amid steady regional output and signs of firm imports from US in July 2024, after slowdown in June 2024. · Supply could get more support from firm regional Group II base oil margins, adding to incentive to maintain or raise regional output.· More readily-available supply would follow rebound in availability during Q2 2024, with base oils imports from US surging in May 2024 to highest in more than five years..· Rise in shipments would coincide with restart of regional Group II unit in April 2024 following scheduled maintenance work..· Europe’s Group III base oils supply likely to remain readily available amid steady flows from within the region and regular shipments from more distant markets.· Supply already remains sufficient during Q2 2024 as pick-up in supplies from Asia covers for plant maintenance work in Finland, leaving supply steady in May 2024..· Europe’s Group III base oils prices extend slide vs Group I and Group II prices throughout Q2 2024, soften vs Group III prices in other regions.· Price weakness suggests that supply is more than sufficient to meet demand in Q2 2024 even with seasonal rise in requirements.· Trend suggests that any rise in supply from levels in months of April and May would exceed demand.· Such a dynamic could materialize if US market continues to trim its Group III import requirements..· South Korea’s base oils exports to Belgium and Netherlands hold firm in Q2 2024 vs Q1 2024, surge vs Q2 2023..· Firm volumes from South Korea would coincide with steady flows to Europe from other Group III suppliers in Asia.· Steady volumes would coincide with typical seasonal slowdown in demand in Europe during third quarter..· Europe’s base oils supply for overseas markets outside the region could improve in Q3 2024 amid likely seasonal slowdown in regional demand.· Any improvement would follow fall in Europe’s total base oils exports to markets outside the region to five-month low in May 2024 amid dip in shipments from Italy and Netherlands..· Lower exports from Netherlands coincides with seasonal pick-up in regional demand in Q2 2024.· Lower exports from Italy follow closure of Group I plant.· Europe's base oils exports still rise 15% in May 2024 from year-earlier levels on pick-up in flows from Belgium, Netherlands and Spain.· All those markets are producers or distribution points for premium-grade base oils..· Supply surplus in the Middle East likely to shrink as shipments to the region extend slowdown.· Base oils exports from US, Europe and Asia to Middle East fall to five-month low in May 2024..· Slowdown likely to extend into June 2024, as South Korea’s base oils exports to the region fall to lowest since early 2022.· Sustained slowdown in shipments could trigger moves to replenish supplies, especially in view of time-lag between purchase and delivery of any shipments from markets like Asia.· Sustained slowdown could also reflect signs of pick-up in shipments from Saudi Arabia to UAE in recent months, curbing need for supplies from other regions..Americas/EMEA base oils demand outlook: Week of 22 July.Asia base oils supply outlook: Week of 22 July.Global base oils margins outlook: Week of 22 July.Global base oils arb outlook: Week of 22 July.Global base oils cargo flows: Week of 22 July