· Europe Group I base oil export prices rise in March 2024, while domestic prices hold steady.· Discount of Europe export prices to domestic prices narrows in response.· US Group II base oils posted prices and export prices rise in March 2024, while domestic prices hold steady.· Premium of posted prices to domestic prices widens further, and export price discount to domestic prices narrows in response.· Export prices often fall relative to domestic prices when suppliers face surplus volumes to clear in overseas markets.· Export prices often rise relative to domestic prices when surplus volumes dwindle, curbing need to keep arbitrage open.· Rising export prices relative to domestic prices in Europe and US coincide with prospect of seasonal pick-up in lube demand in both markets over the coming weeks.· Rising export prices relative to domestic prices point to more limited surplus volumes for overseas markets, especially in Europe.· Prospect of tighter supply, firmer demand and growing attraction of diverting more supplies to export market gives sellers in Europe more leverage over domestic prices.· Europe’s Group I brightstock export price flips to premium to domestic price for first time in almost two years..· Brightstock export price surges from discount of more than $200/tonne to domestic price as recently as Feb 2024.· Brightstock export price premium incentivizes refiners to boost supplies for export market, cut supplies for regional market.· Europe’s Group I light and heavy-neutrals export prices maintain discount to domestic prices.· But discount shrinks to narrowest since September 2022..· US Group II export price discount to domestic prices narrows at end-March 2024..· Unusually wide Group II export price discount since Q4 2023 reflected persistent surplus supply in US market.· Unusually wide Group II export price discount and persistent surplus curbed incentive for domestic blenders to lock in additional supplies.· Group II export price discount stays wide. But narrower discount points either to firmer overseas demand, or to tighter surplus supply, or to refiners’ preference to hold onto supplies.· US refiners’ Group II posted price premium to domestic spot prices rises further in March 2024, with light-grade posted price premium moving to widest level in at least eight years..· Wider gap between posted prices and domestic prices typically precedes fall in posted prices or rise in domestic prices.· Recent rise in posted prices and US export prices suggest that posted prices are unlikely to fall any time soon.· Size of posted price premium to domestic prices and size of export price discount to domestic prices remains unusually wide. · Wide posted/export price differential to domestic prices points to still-sufficient supply and still-cautious domestic demand.· Trends between domestic and export prices in Europe and US follow similar trajectory.· Price signals in Europe, where some export prices are higher than domestic prices, point to tighter fundamentals.· Price signals in US, where export prices remain at a steep discount to domestic prices, point to ongoing pressure from surplus supply..Global base oils margins outlook - week of April 1
· Europe Group I base oil export prices rise in March 2024, while domestic prices hold steady.· Discount of Europe export prices to domestic prices narrows in response.· US Group II base oils posted prices and export prices rise in March 2024, while domestic prices hold steady.· Premium of posted prices to domestic prices widens further, and export price discount to domestic prices narrows in response.· Export prices often fall relative to domestic prices when suppliers face surplus volumes to clear in overseas markets.· Export prices often rise relative to domestic prices when surplus volumes dwindle, curbing need to keep arbitrage open.· Rising export prices relative to domestic prices in Europe and US coincide with prospect of seasonal pick-up in lube demand in both markets over the coming weeks.· Rising export prices relative to domestic prices point to more limited surplus volumes for overseas markets, especially in Europe.· Prospect of tighter supply, firmer demand and growing attraction of diverting more supplies to export market gives sellers in Europe more leverage over domestic prices.· Europe’s Group I brightstock export price flips to premium to domestic price for first time in almost two years..· Brightstock export price surges from discount of more than $200/tonne to domestic price as recently as Feb 2024.· Brightstock export price premium incentivizes refiners to boost supplies for export market, cut supplies for regional market.· Europe’s Group I light and heavy-neutrals export prices maintain discount to domestic prices.· But discount shrinks to narrowest since September 2022..· US Group II export price discount to domestic prices narrows at end-March 2024..· Unusually wide Group II export price discount since Q4 2023 reflected persistent surplus supply in US market.· Unusually wide Group II export price discount and persistent surplus curbed incentive for domestic blenders to lock in additional supplies.· Group II export price discount stays wide. But narrower discount points either to firmer overseas demand, or to tighter surplus supply, or to refiners’ preference to hold onto supplies.· US refiners’ Group II posted price premium to domestic spot prices rises further in March 2024, with light-grade posted price premium moving to widest level in at least eight years..· Wider gap between posted prices and domestic prices typically precedes fall in posted prices or rise in domestic prices.· Recent rise in posted prices and US export prices suggest that posted prices are unlikely to fall any time soon.· Size of posted price premium to domestic prices and size of export price discount to domestic prices remains unusually wide. · Wide posted/export price differential to domestic prices points to still-sufficient supply and still-cautious domestic demand.· Trends between domestic and export prices in Europe and US follow similar trajectory.· Price signals in Europe, where some export prices are higher than domestic prices, point to tighter fundamentals.· Price signals in US, where export prices remain at a steep discount to domestic prices, point to ongoing pressure from surplus supply..Global base oils margins outlook - week of April 1