· US base oils price premium to feedstock/heating oil extends fall.· Lower base oils premium puts more pressure on refiners to adjust output.· Any downward supply adjustments would coincide with weak demand fundamentals, cutting risk of larger supply-build in coming weeks.· Base oils premium also fell at year-end in 2022 and 2023, but US market still saw large supply-build.· Earlier fall in US base oils prices and margins this year could facilitate moves to adjust output.· Any such adjustment would follow signs of more limited supply-build in early weeks of Q4 2024.· Any rise in supply-build would increase importance of open arbitrage to markets like Africa and India to clear surplus volumes..· Moves to limit US supply-build at year-end face complications from prospect of high import volumes in Nov 2024.· South Korea’s base oils exports to US rise in Oct 2024 to second-highest level this year..· Most of the supplies, as well as large volume from UAE, likely to reach US in Nov 2024.· Rise in US base oils imports in Nov 2024 would add to pressure on suppliers to maintain even higher export volumes in response in order to avoid larger supply-build.· Rise in South Korea’s exports to US coincides with sustained improvement in US Group III prices relative to Europe Group III prices since early Oct 2024. · Any extension of the trend raises prospect of shipments from South Korea to US staying at higher levels..· US could attract additional shipments from UAE and Bahrain amid signs of more muted demand for their supplies in China especially, combined with weak fundamentals in Europe.· US imports of premium-grade base oils from Middle East already surge in Sept 2024, far outpacing shipments to Europe and Asia..· US imports rise despite domestic Group III prices holding at discount to prices in Europe and Asia at that time.· Dynamic could point to structural change that outweighs impact of market price levels.· Any signs of more sustained pick-up in flows from UAE and Bahrain to US would add to pressure on flow of shipments from South Korea to US.· Any such sustained wave of shipments would likely keep pressure on Group III prices and on US refiners to maintain higher exports..· Europe’s Group I base oils supply shows signs of staying lower than usual at year-end, and at levels that complicate moves to put together larger shipments to move to overseas markets.· Europe Group I export prices maintain steep premium to prices in markets like Middle East, suggesting any pick-up in surplus supplies at year-end so far remains lower than usual..· Europe’s base oils exports to Middle East extend fall in Sept 2024..· Drop in shipments highlights Europe’s tighter Group I base oils supply throughout this year.· Europe’s tighter supply provides opportunity for refiners in other markets to move more shipments to Middle East instead. .· Europe’s Group II base oils supply likely to stay readily available amid signs of steady regional output and healthy import volumes.· Europe’s imports from overseas markets producing Group II base oils stay higher than usual in Sept 2024 even as they fall from recent highs..· Europe’s Group III base oils supplies could be more mixed.· Supply with full set of OEM approvals likely to improve following completion of plant maintenance work.· Exports from Spain start to revive in H2 Nov 2024, with second large shipment loading this week.· Exports from Spain had slowed sharply during month to mid-Nov 2024.· Supplies without full set of OEM approvals could see slowdown as Europe’s Group III prices fall at faster pace than prices in other regions.· Europe’s Group III base oils supplies already slump to four-year low in Sept 2024, from two-year high in Aug 2024..· Sharp fall in volumes suggests supply may have risen in Aug 2024 to boost stocks ahead of plant maintenance and seasonal rise in demand at end-Q3 2024.· Europe’s relative Group III price-strength in Aug-Sept 2024 facilitated stock-building moves, pointed to expectations of tighter supply-demand fundamentals at end-Q3 2024.· Europe’s weaker Group III prices vs other regions since start of Q4 2024 suggests supply was more than sufficient and/or demand weaker than expected.· Europe’s weaker Group III prices and sufficient supply raise prospect of more Group III shipments moving to other outlets instead during Q4 2024.· Signs of surge in shipments to US in Nov 2024 point to such moves, despite weak demand in that market..Americas/EMEA base oils demand outlook: Week of 25 Nov.Asia base oils supply outlook: Week of 25 Nov.Global base oils margins outlook: Week of 25 Nov.Global base oils cargo flows: Week of 25 Nov.Global base oils arb outlook: Week of 25 Nov
· US base oils price premium to feedstock/heating oil extends fall.· Lower base oils premium puts more pressure on refiners to adjust output.· Any downward supply adjustments would coincide with weak demand fundamentals, cutting risk of larger supply-build in coming weeks.· Base oils premium also fell at year-end in 2022 and 2023, but US market still saw large supply-build.· Earlier fall in US base oils prices and margins this year could facilitate moves to adjust output.· Any such adjustment would follow signs of more limited supply-build in early weeks of Q4 2024.· Any rise in supply-build would increase importance of open arbitrage to markets like Africa and India to clear surplus volumes..· Moves to limit US supply-build at year-end face complications from prospect of high import volumes in Nov 2024.· South Korea’s base oils exports to US rise in Oct 2024 to second-highest level this year..· Most of the supplies, as well as large volume from UAE, likely to reach US in Nov 2024.· Rise in US base oils imports in Nov 2024 would add to pressure on suppliers to maintain even higher export volumes in response in order to avoid larger supply-build.· Rise in South Korea’s exports to US coincides with sustained improvement in US Group III prices relative to Europe Group III prices since early Oct 2024. · Any extension of the trend raises prospect of shipments from South Korea to US staying at higher levels..· US could attract additional shipments from UAE and Bahrain amid signs of more muted demand for their supplies in China especially, combined with weak fundamentals in Europe.· US imports of premium-grade base oils from Middle East already surge in Sept 2024, far outpacing shipments to Europe and Asia..· US imports rise despite domestic Group III prices holding at discount to prices in Europe and Asia at that time.· Dynamic could point to structural change that outweighs impact of market price levels.· Any signs of more sustained pick-up in flows from UAE and Bahrain to US would add to pressure on flow of shipments from South Korea to US.· Any such sustained wave of shipments would likely keep pressure on Group III prices and on US refiners to maintain higher exports..· Europe’s Group I base oils supply shows signs of staying lower than usual at year-end, and at levels that complicate moves to put together larger shipments to move to overseas markets.· Europe Group I export prices maintain steep premium to prices in markets like Middle East, suggesting any pick-up in surplus supplies at year-end so far remains lower than usual..· Europe’s base oils exports to Middle East extend fall in Sept 2024..· Drop in shipments highlights Europe’s tighter Group I base oils supply throughout this year.· Europe’s tighter supply provides opportunity for refiners in other markets to move more shipments to Middle East instead. .· Europe’s Group II base oils supply likely to stay readily available amid signs of steady regional output and healthy import volumes.· Europe’s imports from overseas markets producing Group II base oils stay higher than usual in Sept 2024 even as they fall from recent highs..· Europe’s Group III base oils supplies could be more mixed.· Supply with full set of OEM approvals likely to improve following completion of plant maintenance work.· Exports from Spain start to revive in H2 Nov 2024, with second large shipment loading this week.· Exports from Spain had slowed sharply during month to mid-Nov 2024.· Supplies without full set of OEM approvals could see slowdown as Europe’s Group III prices fall at faster pace than prices in other regions.· Europe’s Group III base oils supplies already slump to four-year low in Sept 2024, from two-year high in Aug 2024..· Sharp fall in volumes suggests supply may have risen in Aug 2024 to boost stocks ahead of plant maintenance and seasonal rise in demand at end-Q3 2024.· Europe’s relative Group III price-strength in Aug-Sept 2024 facilitated stock-building moves, pointed to expectations of tighter supply-demand fundamentals at end-Q3 2024.· Europe’s weaker Group III prices vs other regions since start of Q4 2024 suggests supply was more than sufficient and/or demand weaker than expected.· Europe’s weaker Group III prices and sufficient supply raise prospect of more Group III shipments moving to other outlets instead during Q4 2024.· Signs of surge in shipments to US in Nov 2024 point to such moves, despite weak demand in that market..Americas/EMEA base oils demand outlook: Week of 25 Nov.Asia base oils supply outlook: Week of 25 Nov.Global base oils margins outlook: Week of 25 Nov.Global base oils cargo flows: Week of 25 Nov.Global base oils arb outlook: Week of 25 Nov
