· US base oils demand could turn more muted, with buyers likely to have completed moves to build additional stocks.· Buyers could be more comfortable to hold back for now until supply-demand fundamentals are clearer in a few weeks’ time, once peak-hurricane period has passed.· Firm US prices, and any signs of weaker supply-demand fundamentals, could add to buyers’ preference to hold back.· Seasonal pick-up in demand in final weeks of third quarter could be more muted than usual as buyers first work down their larger stocks..· High US prices and concern about supply disruptions sustain Latin America’s base oils demand for supplies from other regions.· Open arbitrage from Asia to Americas adds to attraction of seeking supplies from other regions.· Pick-up in flows from South Korea points to moves to tap those arbitrage opportunities..· Another shipment from South Korea is expected to reach Brazil in early Sept 2024..· Brazil’s lube demand rises for fourth month in July 2024 from year-earlier levels..· Sustained rise in demand keeps pressure on domestic refiners to maintain high base oils output and importers to maintain higher-than-usual shipments.· Sustained rise in demand adds to importance of arbitrage shipments from South Korea to cushion any disruptions to base oils shipments from the US..· Argentina’s lube demand extends fall for ninth month in July 2024.· Argentina’s lube production falls more sharply than demand in July 2024 for fifth time in six months, triggering sharp fall in lube stocks..· Faster drop in lube production and lower stocks point to scant expectations of any recovery in demand any time soon.· Lower demand and production, and expectations of further slowdown, likely to continue to squeeze Argentina’s base oils requirements..· Europe’s weak lube demand heading into Q3 2024 and signs of improving base oils supply incentivize blenders to maintain low base oils inventories.· That dynamic could limit strength of typical seasonal rise in demand at end of third quarter.· Rising global production capacity of premium-grade base oils and falling capacity of Group I base oils adds to incentive for blenders to use more premium grades.· Europe’s sustained demand for Group I base oils could instead leave blenders exposed to eroding competitiveness vs blenders in other regions. · Europe’s base oils premium to feedstock/competing fuel prices extends rise, pointing to increasingly firm supply-demand fundamentals.· Those price signals contrast with signs of muted lube consumption and ongoing preference to manage stocks carefully.· Firm margins could add to buyers’ preference to limit stock-build amid concern about exposure to any price adjustments. .· Europe’s Group III base oils price premium vs US prices extends rise to widest in more than a year.· Europe’s Group III base oils price discount to ex-terminal East China Group III prices narrows to smallest discount since Nov 2023.· Price trends insinuate firmer Group III demand in Europe relative to those other regions..· Demand from the Middle East could revive after global exports to the region fall to 22-month low in June 2024..· Drop in shipments curbs additional supply-build, leaves region more reliant on existing supplies to cover requirements at start of Q3 2024.· Large build-up of surplus supplies in Jan-Apr 2024 prompts sharp slowdown in requirements over following months.· Consumption of those supplies raises prospect of stock replenishment and revival in demand in coming months, even if at lower levels than in Jan-Apr 2024..· Shipments from Saudi Arabia's ports of Yanbu and Jeddah fall to five-month low in July 2024..· Most of the supplies move to US and South Africa, compounding slowdown in shipments to UAE.· Dynamic limits further any supply-build in UAE at start of Q3 2024, adding to prospect of moves to replenish stocks.· Some signs of stock-replenishment duly materialize.· Supplies in UAE could get boost in coming weeks amid signs of pick-up in exports from Saudi Arabia in Aug 2024.· Shipment from South Korea also scheduled to reach UAE in early-Sept 2024.· The shipments could help replenish stocks, giving buyers more leverage to hold back for longer in anticipation of pick-up in supplies at more competitive price levels in coming months..Asia base oils demand outlook: Week of 26 Aug.Global base oils arb outlook: Week of 26 Aug.Global base oils cargo flows: Week of 26 Aug.Saudi Arabia’s July Yanbu/Jeddah exports fall.Global base oil exports to Mideast Gulf fall in June.Brazil’s July lube demand extends rise.Argentina’s July lube demand falls
· US base oils demand could turn more muted, with buyers likely to have completed moves to build additional stocks.· Buyers could be more comfortable to hold back for now until supply-demand fundamentals are clearer in a few weeks’ time, once peak-hurricane period has passed.· Firm US prices, and any signs of weaker supply-demand fundamentals, could add to buyers’ preference to hold back.· Seasonal pick-up in demand in final weeks of third quarter could be more muted than usual as buyers first work down their larger stocks..· High US prices and concern about supply disruptions sustain Latin America’s base oils demand for supplies from other regions.· Open arbitrage from Asia to Americas adds to attraction of seeking supplies from other regions.· Pick-up in flows from South Korea points to moves to tap those arbitrage opportunities..· Another shipment from South Korea is expected to reach Brazil in early Sept 2024..· Brazil’s lube demand rises for fourth month in July 2024 from year-earlier levels..· Sustained rise in demand keeps pressure on domestic refiners to maintain high base oils output and importers to maintain higher-than-usual shipments.· Sustained rise in demand adds to importance of arbitrage shipments from South Korea to cushion any disruptions to base oils shipments from the US..· Argentina’s lube demand extends fall for ninth month in July 2024.· Argentina’s lube production falls more sharply than demand in July 2024 for fifth time in six months, triggering sharp fall in lube stocks..· Faster drop in lube production and lower stocks point to scant expectations of any recovery in demand any time soon.· Lower demand and production, and expectations of further slowdown, likely to continue to squeeze Argentina’s base oils requirements..· Europe’s weak lube demand heading into Q3 2024 and signs of improving base oils supply incentivize blenders to maintain low base oils inventories.· That dynamic could limit strength of typical seasonal rise in demand at end of third quarter.· Rising global production capacity of premium-grade base oils and falling capacity of Group I base oils adds to incentive for blenders to use more premium grades.· Europe’s sustained demand for Group I base oils could instead leave blenders exposed to eroding competitiveness vs blenders in other regions. · Europe’s base oils premium to feedstock/competing fuel prices extends rise, pointing to increasingly firm supply-demand fundamentals.· Those price signals contrast with signs of muted lube consumption and ongoing preference to manage stocks carefully.· Firm margins could add to buyers’ preference to limit stock-build amid concern about exposure to any price adjustments. .· Europe’s Group III base oils price premium vs US prices extends rise to widest in more than a year.· Europe’s Group III base oils price discount to ex-terminal East China Group III prices narrows to smallest discount since Nov 2023.· Price trends insinuate firmer Group III demand in Europe relative to those other regions..· Demand from the Middle East could revive after global exports to the region fall to 22-month low in June 2024..· Drop in shipments curbs additional supply-build, leaves region more reliant on existing supplies to cover requirements at start of Q3 2024.· Large build-up of surplus supplies in Jan-Apr 2024 prompts sharp slowdown in requirements over following months.· Consumption of those supplies raises prospect of stock replenishment and revival in demand in coming months, even if at lower levels than in Jan-Apr 2024..· Shipments from Saudi Arabia's ports of Yanbu and Jeddah fall to five-month low in July 2024..· Most of the supplies move to US and South Africa, compounding slowdown in shipments to UAE.· Dynamic limits further any supply-build in UAE at start of Q3 2024, adding to prospect of moves to replenish stocks.· Some signs of stock-replenishment duly materialize.· Supplies in UAE could get boost in coming weeks amid signs of pick-up in exports from Saudi Arabia in Aug 2024.· Shipment from South Korea also scheduled to reach UAE in early-Sept 2024.· The shipments could help replenish stocks, giving buyers more leverage to hold back for longer in anticipation of pick-up in supplies at more competitive price levels in coming months..Asia base oils demand outlook: Week of 26 Aug.Global base oils arb outlook: Week of 26 Aug.Global base oils cargo flows: Week of 26 Aug.Saudi Arabia’s July Yanbu/Jeddah exports fall.Global base oil exports to Mideast Gulf fall in June.Brazil’s July lube demand extends rise.Argentina’s July lube demand falls
