· US domestic base oils demand could stay lower than usual amid signs of plentiful supply.· Several refiners’ moves to raise posted prices in H2 Feb 2024 fail to trigger similar rise by other refiners.· Such price adjustments typically prompt other refiners to follow in kind.· Lack of any such moves, and steep discount of US export prices to domestic prices, point to weak supply-demand fundamentals.· Weak supply-demand fundamentals give buyers flexibility to procure smaller volumes more frequently.· Weak domestic demand increases importance of maintaining steady overseas demand, and of prices that sustain that buying interest.· US export prices fall further relative to prices in overseas markets, sustaining feasibility of more arbitrage shipments..· US’ December base oils/lube demand remains well above levels in Dec 2022 as surging exports cushion slump in domestic consumption to record low..· Trend contrasts with slump in US base oils exports in Dec 2022.· Base oils/lube exports account for record-high share of US’ total demand in Dec 2023 and more than 50pc of total demand every month since March 2023..· Trend highlights importance of maintaining high exports while domestic demand remains weak, and of US prices that help to sustain high exports..· Rise in Latin America’s supply in Dec 2023 coincides with pick-up in US base oil exports to the region.· Trend triggers surge in region’s surplus of supply over demand to seven-month high..· A significant portion of region’s large surplus in 1H 2023 ended up as fuel-extender in diesel market.· Mexico’s stricter rules on base oils imports in Q4 2023 curbed such moves.· Removal of fuel-extender market likely to complicate clear-out of surplus supplies at end-2023, slowing demand for longer..· Europe’s demand for US Group II base oils likely to hold strong at least into Q2 2024 amid sustained drop in region’s supplies of the product since start of Q4 2023.· Steep discount of US domestic and export prices to Europe Group II prices facilitates such flows.· Europe’s demand for US Group II base oils boosts need for US refiners to maintain production at levels that cover Europe’s requirements.· Europe’s demand helps to cushion slowdown in requirements from other regions like Latin America..· Europe’s Group I export price discount to domestic prices narrows sharply.· Bright stock export price discount to domestic prices moves to narrowest in almost three months; SN 150 discount at narrowest in more than five months.· Narrowing discount points to tighter supply-demand fundamentals.· Discount of Europe Group I export prices to Asia prices stays wide, sustaining attraction of moving arbitrage supplies to that region.· UK’s December base oils demand slumps to multi-year low because of seasonal drop in demand and tight supply that curbs volumes available for export..· Drop in UK's base oils exports in Nov 2023 and Dec 2023 has major impact on shipments to Africa.· Drop in exports in Nov 2023 and Dec 2023 forces/incentivizes overseas buyers to line up supplies from other sources instead.· Any subsequent drop in UK’s base oils exports set to have even larger impact following imminent closure of Group I base oils plant in Italy..· Tanzania’s base oils imports rise in 2023 to highest in at least eight years..· Imports from Saudi Arabia account for around 50pc of Tanzania's import volume, up from less than 35pc in 2022 and less than 15pc in 2021.· Prospect of further drop in Europe’s Group I supplies provides opportunity for suppliers like Saudi Arabia to increase further their volume of shipments to Tanzania. .Asia base oils demand outlook: Week of March 11.Global base oils margins outlook: Week of March 11.Global base oils arb outlook: Week of March 11
· US domestic base oils demand could stay lower than usual amid signs of plentiful supply.· Several refiners’ moves to raise posted prices in H2 Feb 2024 fail to trigger similar rise by other refiners.· Such price adjustments typically prompt other refiners to follow in kind.· Lack of any such moves, and steep discount of US export prices to domestic prices, point to weak supply-demand fundamentals.· Weak supply-demand fundamentals give buyers flexibility to procure smaller volumes more frequently.· Weak domestic demand increases importance of maintaining steady overseas demand, and of prices that sustain that buying interest.· US export prices fall further relative to prices in overseas markets, sustaining feasibility of more arbitrage shipments..· US’ December base oils/lube demand remains well above levels in Dec 2022 as surging exports cushion slump in domestic consumption to record low..· Trend contrasts with slump in US base oils exports in Dec 2022.· Base oils/lube exports account for record-high share of US’ total demand in Dec 2023 and more than 50pc of total demand every month since March 2023..· Trend highlights importance of maintaining high exports while domestic demand remains weak, and of US prices that help to sustain high exports..· Rise in Latin America’s supply in Dec 2023 coincides with pick-up in US base oil exports to the region.· Trend triggers surge in region’s surplus of supply over demand to seven-month high..· A significant portion of region’s large surplus in 1H 2023 ended up as fuel-extender in diesel market.· Mexico’s stricter rules on base oils imports in Q4 2023 curbed such moves.· Removal of fuel-extender market likely to complicate clear-out of surplus supplies at end-2023, slowing demand for longer..· Europe’s demand for US Group II base oils likely to hold strong at least into Q2 2024 amid sustained drop in region’s supplies of the product since start of Q4 2023.· Steep discount of US domestic and export prices to Europe Group II prices facilitates such flows.· Europe’s demand for US Group II base oils boosts need for US refiners to maintain production at levels that cover Europe’s requirements.· Europe’s demand helps to cushion slowdown in requirements from other regions like Latin America..· Europe’s Group I export price discount to domestic prices narrows sharply.· Bright stock export price discount to domestic prices moves to narrowest in almost three months; SN 150 discount at narrowest in more than five months.· Narrowing discount points to tighter supply-demand fundamentals.· Discount of Europe Group I export prices to Asia prices stays wide, sustaining attraction of moving arbitrage supplies to that region.· UK’s December base oils demand slumps to multi-year low because of seasonal drop in demand and tight supply that curbs volumes available for export..· Drop in UK's base oils exports in Nov 2023 and Dec 2023 has major impact on shipments to Africa.· Drop in exports in Nov 2023 and Dec 2023 forces/incentivizes overseas buyers to line up supplies from other sources instead.· Any subsequent drop in UK’s base oils exports set to have even larger impact following imminent closure of Group I base oils plant in Italy..· Tanzania’s base oils imports rise in 2023 to highest in at least eight years..· Imports from Saudi Arabia account for around 50pc of Tanzania's import volume, up from less than 35pc in 2022 and less than 15pc in 2021.· Prospect of further drop in Europe’s Group I supplies provides opportunity for suppliers like Saudi Arabia to increase further their volume of shipments to Tanzania. .Asia base oils demand outlook: Week of March 11.Global base oils margins outlook: Week of March 11.Global base oils arb outlook: Week of March 11