· US base oils demand likely to be mixed.· Blenders and distributors face challenge of balancing weak finished lube demand with need to have sufficient stocks in diverse locations to cover for any supply disruptions.· Stock-building could take longer to complete amid more limited surplus availability.· Demand likely to stay weak in overseas outlets that typically absorb surplus US supplies, like India, with arbitrage tightly shut.· Demand likely to hold firm in overseas outlets like Latin America that are reliant on US supplies and where the supply-demand balance is already tight..· Those fundamentals show signs of staying tight, with Brazil’s lube demand rising in June 2024 for fifth time in six months..· Demand gets boost from recovery in consumption in Rio Grande do Sul, following sharp contraction in lube demand in the state in May 2024.· Brazil’s firm lube demand keeps pressure on domestic base oils output and imports to stay at higher levels.· Firm requirements for base oils imports could add to country’s interest in seeking supplies from other markets besides US to reduce its reliance on that source..· Brazil's firm consumption cushions impact of weak demand in Argentina, whose lube consumption extends fall in June 2024 for eighth month.· Steeper demand contraction in June than in May raises uncertainty about timing of any recovery.· Ongoing slide in demand sustains incentive for blenders to trim output and maintain low stocks of finished lubes and base oils.· Argentina’s lube production duly falls more steeply than demand in June 2024, cutting stocks..· Trend cuts base oils demand in short term, but lower stocks raise prospect of sharper recovery in demand when consumption revives..· Europe’s base oils demand could get support as buyers start to eye supplies for delivery in final weeks of Q3 2024.· Demand could get further support as steady outright base oils prices and firm margins point to limited surplus supply.· Regional blenders likely to continue to procure smaller volumes more frequently amid signs of still-weak finished lube consumption.· Blenders’ lower stocks, and more frequent procurement of smaller volumes, could cushion size of slowdown in demand over coming weeks.· Firm Group I prices and tighter supply incentivize blenders to minimize consumption of Group I base oils and to use more premium-grade base oils instead.· Narrow gap between Group II and Group III base oils prices incentivizes buyers to use more Group III base oils.· Wide gap between Group III low and high prices incentivizes blenders to maximise consumption of premium-grade base oils without full OEM approvals.· Overseas demand for Europe’s base oils supplies is likely to remain muted even if slower regional demand frees up surplus volumes for export over the coming weeks.· High Europe export prices relative to overseas markets likely to dampen any buying interest..· Italy’s lube demand falls in June 2024 for third time in four months as industrial oils consumption slumps..· Italy’s lube demand had led a recovery in consumption in southern Europe in H2 2023.· Italy’s shrinking lube consumption removes key support for Europe’s steadier lube demand this year.· Italy’s shrinking lube demand could be precursor of more widespread slowdown in demand in southern Europe.· Lack of any sustained recovery in demand incentivizes blenders to maintain low finished lube and base oils inventories, and to procure smaller feedstock volumes more frequently.· Trend puts onus on base oils distributors rather than blenders to maintain sufficient stocks, and the costs and price- and demand-risk that entails..Asia base oils demand outlook: Week of 29 July.Global base oils arb outlook: Week of 29 July.Global base oils margins outlook: Week of 29 July
· US base oils demand likely to be mixed.· Blenders and distributors face challenge of balancing weak finished lube demand with need to have sufficient stocks in diverse locations to cover for any supply disruptions.· Stock-building could take longer to complete amid more limited surplus availability.· Demand likely to stay weak in overseas outlets that typically absorb surplus US supplies, like India, with arbitrage tightly shut.· Demand likely to hold firm in overseas outlets like Latin America that are reliant on US supplies and where the supply-demand balance is already tight..· Those fundamentals show signs of staying tight, with Brazil’s lube demand rising in June 2024 for fifth time in six months..· Demand gets boost from recovery in consumption in Rio Grande do Sul, following sharp contraction in lube demand in the state in May 2024.· Brazil’s firm lube demand keeps pressure on domestic base oils output and imports to stay at higher levels.· Firm requirements for base oils imports could add to country’s interest in seeking supplies from other markets besides US to reduce its reliance on that source..· Brazil's firm consumption cushions impact of weak demand in Argentina, whose lube consumption extends fall in June 2024 for eighth month.· Steeper demand contraction in June than in May raises uncertainty about timing of any recovery.· Ongoing slide in demand sustains incentive for blenders to trim output and maintain low stocks of finished lubes and base oils.· Argentina’s lube production duly falls more steeply than demand in June 2024, cutting stocks..· Trend cuts base oils demand in short term, but lower stocks raise prospect of sharper recovery in demand when consumption revives..· Europe’s base oils demand could get support as buyers start to eye supplies for delivery in final weeks of Q3 2024.· Demand could get further support as steady outright base oils prices and firm margins point to limited surplus supply.· Regional blenders likely to continue to procure smaller volumes more frequently amid signs of still-weak finished lube consumption.· Blenders’ lower stocks, and more frequent procurement of smaller volumes, could cushion size of slowdown in demand over coming weeks.· Firm Group I prices and tighter supply incentivize blenders to minimize consumption of Group I base oils and to use more premium-grade base oils instead.· Narrow gap between Group II and Group III base oils prices incentivizes buyers to use more Group III base oils.· Wide gap between Group III low and high prices incentivizes blenders to maximise consumption of premium-grade base oils without full OEM approvals.· Overseas demand for Europe’s base oils supplies is likely to remain muted even if slower regional demand frees up surplus volumes for export over the coming weeks.· High Europe export prices relative to overseas markets likely to dampen any buying interest..· Italy’s lube demand falls in June 2024 for third time in four months as industrial oils consumption slumps..· Italy’s lube demand had led a recovery in consumption in southern Europe in H2 2023.· Italy’s shrinking lube consumption removes key support for Europe’s steadier lube demand this year.· Italy’s shrinking lube demand could be precursor of more widespread slowdown in demand in southern Europe.· Lack of any sustained recovery in demand incentivizes blenders to maintain low finished lube and base oils inventories, and to procure smaller feedstock volumes more frequently.· Trend puts onus on base oils distributors rather than blenders to maintain sufficient stocks, and the costs and price- and demand-risk that entails..Asia base oils demand outlook: Week of 29 July.Global base oils arb outlook: Week of 29 July.Global base oils margins outlook: Week of 29 July