· US Group II domestic and export prices hold firm so far in Q3 2024 vs feedstock prices and vs prices in Europe and Asia..· US prices hold firm at a time of year when domestic demand typically starts to face seasonal slowdown.· Price-strength points to firmer-than-usual supply-demand fundamentals amid concern about a more-active-than-usual Atlantic hurricane season and its impact on supplies.· US Group II export prices extend rising premium to prices in Asia and India, and maintain narrower discount to prices in Europe..· US Group II export prices maintain narrower discount to domestic prices.· Narrower discount and closed arbitrage suggests US refiners face little pressure or need so far to clear surplus supplies.· Closed arbitrage suggests markets like India and Europe have access to sufficient supplies even with drop in shipments from US.· Closed arbitrage or disruption to supplies from US would be more problematic for buyers in US and in Latin America, which is heavily reliant on US for its base oils supplies.· That reliance grew this year because of a drop in arbitrage shipments from other regions.· US supplies account for 76% of Brazil’s base oils imports in Jan-May 2024, up from 72% share in 2023..· High and growing reliance on US supplies boosts incentive for buyers in Latin America to eye alternative sources to cover against risk of supply disruptions over the coming months.· Asia is the obvious source for such supplies.· Any shipments lined up for delivery in August or September 2024 would reduce the reliance on US supplies and cut buyers' exposure to hurricane-related disruptions. · Asia’s Group II heavy-grade cargo prices weaken in July to largest discount to US export prices in more than seven months..· Widening discount coincides with rise in South Korea’s base oils exports to Brazil to record-high levels in June 2024.· The incentive for Latin American buyers to diversify their source of supplies over the coming months, and sufficient availability in Asia-Pacific, suggests more such shipments could make a similar trip across the Pacific Ocean over the coming weeks..Global base oils margins outlook: Week of 22 July.Asia base oils demand outlook: Week of 22 July.Asia base oils supply outlook: Week of 22 July
· US Group II domestic and export prices hold firm so far in Q3 2024 vs feedstock prices and vs prices in Europe and Asia..· US prices hold firm at a time of year when domestic demand typically starts to face seasonal slowdown.· Price-strength points to firmer-than-usual supply-demand fundamentals amid concern about a more-active-than-usual Atlantic hurricane season and its impact on supplies.· US Group II export prices extend rising premium to prices in Asia and India, and maintain narrower discount to prices in Europe..· US Group II export prices maintain narrower discount to domestic prices.· Narrower discount and closed arbitrage suggests US refiners face little pressure or need so far to clear surplus supplies.· Closed arbitrage suggests markets like India and Europe have access to sufficient supplies even with drop in shipments from US.· Closed arbitrage or disruption to supplies from US would be more problematic for buyers in US and in Latin America, which is heavily reliant on US for its base oils supplies.· That reliance grew this year because of a drop in arbitrage shipments from other regions.· US supplies account for 76% of Brazil’s base oils imports in Jan-May 2024, up from 72% share in 2023..· High and growing reliance on US supplies boosts incentive for buyers in Latin America to eye alternative sources to cover against risk of supply disruptions over the coming months.· Asia is the obvious source for such supplies.· Any shipments lined up for delivery in August or September 2024 would reduce the reliance on US supplies and cut buyers' exposure to hurricane-related disruptions. · Asia’s Group II heavy-grade cargo prices weaken in July to largest discount to US export prices in more than seven months..· Widening discount coincides with rise in South Korea’s base oils exports to Brazil to record-high levels in June 2024.· The incentive for Latin American buyers to diversify their source of supplies over the coming months, and sufficient availability in Asia-Pacific, suggests more such shipments could make a similar trip across the Pacific Ocean over the coming weeks..Global base oils margins outlook: Week of 22 July.Asia base oils demand outlook: Week of 22 July.Asia base oils supply outlook: Week of 22 July