· Europe’s Group II base oils price premium to US export prices surges in Q1 2024.· Surging premium boosts attraction of moving more arbitrage shipments from US to Europe.· Prospect of more arbitrage shipments coincides with shutdown of Europe’s sole Group II base oils unit for maintenance work during Q1 2024.· Surging premium and prospect of more arbitrage shipments coincide with seasonal dip in demand in Europe in early 2024.· Surging premium to US prices and weak demand coincide with steady fall in Europe’s Group II price premium to feedstock prices through Q1 2024.· Fall in Group II premium to feedstock prices points to weak demand and sufficient supply in Q1 2024, even with shutdown of Group II base oils unit. · Those factors affecting supply-demand dynamics now show signs of reversing, with recent rebound in US prices, signs of seasonal pick-up in regional demand, and restart of Group II unit in Europe.· Europe’s Group II N150 premium to US export prices falls to close to $300/tonne in H1 April 2024, from more than $400/tonne in March 2024..· Narrowing Group II premium cuts attraction of lining up more arbitrage shipments from US to Europe..· Volume of US shipments to Europe shows signs of staying steady-to-low in Q1 2024 even with wide-open arbitrage during that period..· Relatively low volumes from US and Group II plant shutdown in Europe likely keep region’s Group II supply lower than expected during Q1 2024..· Europe’s Group II light-grade base oil premium to feedstock prices falls to five-month low in March 2024 even with tighter-than-expected supply..· Weaker Group II base oil premium to VGO coincides with seasonally weak demand at start of the year..· Weaker Group II base oils premium to VGO could also reflect impact of Europe’s steep Group II premium to US prices and expectations of sharper pick-up in supplies from US. · Europe’s steep Group II premium to US prices and expectations of sufficient supply in Q1 2024 complicate any moves to adjust prices during that period.· Europe’s narrowing premium to US prices in recent weeks, signs of tighter-than-expected Group II supply in Q1 2024 and a seasonal pick-up in demand could reverse some of those complications.· Recent restart of Europe’s Group II base oils unit conversely raises the prospect of boosting regional supply and countering impact of any slowdown in US shipments to Europe.· Even so, with less competition from supplies in US and Asia, fundamentals factors in Europe rather than in other regions are likely to have a larger impact on Europe’s Group II prices over the coming months..Global base oils margins outlook: Week of 15 April.Asia base oils demand outlook: Week of 15 April
· Europe’s Group II base oils price premium to US export prices surges in Q1 2024.· Surging premium boosts attraction of moving more arbitrage shipments from US to Europe.· Prospect of more arbitrage shipments coincides with shutdown of Europe’s sole Group II base oils unit for maintenance work during Q1 2024.· Surging premium and prospect of more arbitrage shipments coincide with seasonal dip in demand in Europe in early 2024.· Surging premium to US prices and weak demand coincide with steady fall in Europe’s Group II price premium to feedstock prices through Q1 2024.· Fall in Group II premium to feedstock prices points to weak demand and sufficient supply in Q1 2024, even with shutdown of Group II base oils unit. · Those factors affecting supply-demand dynamics now show signs of reversing, with recent rebound in US prices, signs of seasonal pick-up in regional demand, and restart of Group II unit in Europe.· Europe’s Group II N150 premium to US export prices falls to close to $300/tonne in H1 April 2024, from more than $400/tonne in March 2024..· Narrowing Group II premium cuts attraction of lining up more arbitrage shipments from US to Europe..· Volume of US shipments to Europe shows signs of staying steady-to-low in Q1 2024 even with wide-open arbitrage during that period..· Relatively low volumes from US and Group II plant shutdown in Europe likely keep region’s Group II supply lower than expected during Q1 2024..· Europe’s Group II light-grade base oil premium to feedstock prices falls to five-month low in March 2024 even with tighter-than-expected supply..· Weaker Group II base oil premium to VGO coincides with seasonally weak demand at start of the year..· Weaker Group II base oils premium to VGO could also reflect impact of Europe’s steep Group II premium to US prices and expectations of sharper pick-up in supplies from US. · Europe’s steep Group II premium to US prices and expectations of sufficient supply in Q1 2024 complicate any moves to adjust prices during that period.· Europe’s narrowing premium to US prices in recent weeks, signs of tighter-than-expected Group II supply in Q1 2024 and a seasonal pick-up in demand could reverse some of those complications.· Recent restart of Europe’s Group II base oils unit conversely raises the prospect of boosting regional supply and countering impact of any slowdown in US shipments to Europe.· Even so, with less competition from supplies in US and Asia, fundamentals factors in Europe rather than in other regions are likely to have a larger impact on Europe’s Group II prices over the coming months..Global base oils margins outlook: Week of 15 April.Asia base oils demand outlook: Week of 15 April