· US base oils demand likely to get ongoing support until buyers are comfortable that they have sufficient stocks to cover against supply disruptions.· Signs of limited surplus supply and high crude oil prices could add further support.· Buying interest reflects more the impact of stock-building rather than end-user demand.· End-user demand would need to rise or supplies face disruptions to avoid US market facing large surplus at end of Q3 2024.· Buying interest could appear for supplies that are less likely to be impacted by weather-related disruptions, such as storage away from the US Gulf coast, or arbitrage shipments from Asia.· Latin America’s base oils demand shows signs of holding firm.· Region’s demand typically holds firm in the months of July and August before dipping in September..· US base oils exports to South America rise in May 2024 even as total US exports fall..· Rising exports to markets like Peru and Chile point to firm demand throughout the region, and highlight the region’s growing reliance on US supplies to cover most of its requirements.· That reliance could cause supply issues if US base oils production faces weather-related disruptions over the coming months..· Peru’s base oils/lube imports rise in June 2024 for second time in three months from year-earlier levels, adding to steady rise in shipments so far this year..· Chile’s base oils imports rise in June yoy and in Q2 2024 for third straight quarter..· Firm demand from markets like Peru and Chile could prompt buyers to eye more supplies from Asia in view of tighter availability in US and concern about weather-related supply disruptions..· Europe’s base oils demand is set to face a seasonal slowdown in the coming weeks, when lubricants production typically slows.· Blenders may be more comfortable seeking and holding larger volumes of Group I base oils in view of the tighter availability of the product.· Tight Group I supply and its increasingly narrow discount to Group II/III base oils is likely to keep eroding demand for the product..· Tight Group I supply contrasts with ready availability of premium-grade base oils, even with recent plant maintenance in Europe, logistical issues in the Red Sea and weather-related concerns in the US.· Mixed lube demand growth in Europe’s key markets so far this year likely to incentivize blenders to maintain lean stocks..· Tighter supply and rising prices for European Group I base oils boost Turkey’s demand for supplies from Russia.· Price gap between imported Group I supplies of Russian origin and supplies of Greek origin surges in May 2024 to widest since end-2022..· Price gap between imported supplies of Greek origin and supplies of Italian origin almost disappears as Group I supply in Europe tightens.· Turkey-bound cargoes of Greek origin were typically at a steep discount to supplies of Italian origin.· Share of Turkey’s imports from Russia rises to more than 30% in May 2024 from 25% from previous month.· Share from Europe falls to 37% in May 2024 from more than 50% the previous month..· Trend likely to continue in face of structural tightness of Europe’s Group I supply.· Rise in demand for Group I supplies of Russian origin likely to extend to and hold firm in other outlets like UAE and India amid scant availability and unworkable arbitrage for Europe supplies..· Recent pick-up in shipments to Nigeria show signs of continuing, with several cargoes from Europe and US set to reach the West African country in H1 Aug 2024..Asia base oils demand outlook: Week of 15 July.Global base oils demand outlook: Week of 15 July.Global base oils arb outlook: Week of 15 July.Global base oils cargo flows: Week of 15 July
· US base oils demand likely to get ongoing support until buyers are comfortable that they have sufficient stocks to cover against supply disruptions.· Signs of limited surplus supply and high crude oil prices could add further support.· Buying interest reflects more the impact of stock-building rather than end-user demand.· End-user demand would need to rise or supplies face disruptions to avoid US market facing large surplus at end of Q3 2024.· Buying interest could appear for supplies that are less likely to be impacted by weather-related disruptions, such as storage away from the US Gulf coast, or arbitrage shipments from Asia.· Latin America’s base oils demand shows signs of holding firm.· Region’s demand typically holds firm in the months of July and August before dipping in September..· US base oils exports to South America rise in May 2024 even as total US exports fall..· Rising exports to markets like Peru and Chile point to firm demand throughout the region, and highlight the region’s growing reliance on US supplies to cover most of its requirements.· That reliance could cause supply issues if US base oils production faces weather-related disruptions over the coming months..· Peru’s base oils/lube imports rise in June 2024 for second time in three months from year-earlier levels, adding to steady rise in shipments so far this year..· Chile’s base oils imports rise in June yoy and in Q2 2024 for third straight quarter..· Firm demand from markets like Peru and Chile could prompt buyers to eye more supplies from Asia in view of tighter availability in US and concern about weather-related supply disruptions..· Europe’s base oils demand is set to face a seasonal slowdown in the coming weeks, when lubricants production typically slows.· Blenders may be more comfortable seeking and holding larger volumes of Group I base oils in view of the tighter availability of the product.· Tight Group I supply and its increasingly narrow discount to Group II/III base oils is likely to keep eroding demand for the product..· Tight Group I supply contrasts with ready availability of premium-grade base oils, even with recent plant maintenance in Europe, logistical issues in the Red Sea and weather-related concerns in the US.· Mixed lube demand growth in Europe’s key markets so far this year likely to incentivize blenders to maintain lean stocks..· Tighter supply and rising prices for European Group I base oils boost Turkey’s demand for supplies from Russia.· Price gap between imported Group I supplies of Russian origin and supplies of Greek origin surges in May 2024 to widest since end-2022..· Price gap between imported supplies of Greek origin and supplies of Italian origin almost disappears as Group I supply in Europe tightens.· Turkey-bound cargoes of Greek origin were typically at a steep discount to supplies of Italian origin.· Share of Turkey’s imports from Russia rises to more than 30% in May 2024 from 25% from previous month.· Share from Europe falls to 37% in May 2024 from more than 50% the previous month..· Trend likely to continue in face of structural tightness of Europe’s Group I supply.· Rise in demand for Group I supplies of Russian origin likely to extend to and hold firm in other outlets like UAE and India amid scant availability and unworkable arbitrage for Europe supplies..· Recent pick-up in shipments to Nigeria show signs of continuing, with several cargoes from Europe and US set to reach the West African country in H1 Aug 2024..Asia base oils demand outlook: Week of 15 July.Global base oils demand outlook: Week of 15 July.Global base oils arb outlook: Week of 15 July.Global base oils cargo flows: Week of 15 July