· US base oils export price discount to domestic prices stays relatively steady so far in Q4 2024 even as outright prices fall..· Steady discount contrasts with surge in Group II heavy-grade export price discount to domestic prices in Q4 2023.· Wide discount in Q4 2023 and Q1 2024 reflected steep fall in export prices in order to open arbitrage and clear wave of surplus supplies to markets like India and Middle East. · Narrower discount this time adds to signs of more manageable build-up of surplus supplies so far in Q4 2024..· Slower build-up of surplus supplies follows sustained flow of high export volumes this year, including in Q3 2024..· High export volumes more than counter impact of weak domestic demand, triggering sustained fall in US base oils and lube stocks throughout most of this year..· High exports to other markets contrast with signs of less feasible arbitrage to move overseas shipments to the Americas.· Arbitrage to move Group II supplies from Asia to Americas gets harder to work from H1 Sept 2024 as US export price-premium to FOB Asia prices starts to narrow..· Narrowing price premium contrasts with open arbitrage from Asia to Americas during first ten months of 2023..· Closed arbitrage curbs supply options in Latin America to shipments from US.· Supply-demand balance in Latin America stays tight at end-Q3 2024..· Tight supply-demand balance in Latin America raises prospect of supporting steadier requirements from US in Q4 2024..· Tighter supply-demand balance extends to Europe’s Group I base oils market.· Plant closure in Italy this year triggers steady fall in output from key source of surplus Group I supplies in the region..· Europe’s smaller supply surplus coincides with pick-up in flow of Group I base oils shipments from US to Africa in Q3 2024, with another shipment in Oct 2024..· Shipments remove additional surplus volumes from US market..· US surplus supply could still build fast in coming months, repeating similar pattern in late 2022 and early 2023.· At that time, arbitrage from US to markets like India was shut and arbitrage from Asia to Americas was wide open.· At that time, US base oils/lube exports fell in Q4 2022 to lowest since Q2 2020.· Price and supply trends so far in Q4 2024 suggest US market is better positioned to avoid repeat of that scenario..Asia base oils supply outlook: Week of 25 Nov.Asia base oils demand outlook: Week of 25 Nov.Global base oils margins outlook: Week of 25 Nov
· US base oils export price discount to domestic prices stays relatively steady so far in Q4 2024 even as outright prices fall..· Steady discount contrasts with surge in Group II heavy-grade export price discount to domestic prices in Q4 2023.· Wide discount in Q4 2023 and Q1 2024 reflected steep fall in export prices in order to open arbitrage and clear wave of surplus supplies to markets like India and Middle East. · Narrower discount this time adds to signs of more manageable build-up of surplus supplies so far in Q4 2024..· Slower build-up of surplus supplies follows sustained flow of high export volumes this year, including in Q3 2024..· High export volumes more than counter impact of weak domestic demand, triggering sustained fall in US base oils and lube stocks throughout most of this year..· High exports to other markets contrast with signs of less feasible arbitrage to move overseas shipments to the Americas.· Arbitrage to move Group II supplies from Asia to Americas gets harder to work from H1 Sept 2024 as US export price-premium to FOB Asia prices starts to narrow..· Narrowing price premium contrasts with open arbitrage from Asia to Americas during first ten months of 2023..· Closed arbitrage curbs supply options in Latin America to shipments from US.· Supply-demand balance in Latin America stays tight at end-Q3 2024..· Tight supply-demand balance in Latin America raises prospect of supporting steadier requirements from US in Q4 2024..· Tighter supply-demand balance extends to Europe’s Group I base oils market.· Plant closure in Italy this year triggers steady fall in output from key source of surplus Group I supplies in the region..· Europe’s smaller supply surplus coincides with pick-up in flow of Group I base oils shipments from US to Africa in Q3 2024, with another shipment in Oct 2024..· Shipments remove additional surplus volumes from US market..· US surplus supply could still build fast in coming months, repeating similar pattern in late 2022 and early 2023.· At that time, arbitrage from US to markets like India was shut and arbitrage from Asia to Americas was wide open.· At that time, US base oils/lube exports fell in Q4 2022 to lowest since Q2 2020.· Price and supply trends so far in Q4 2024 suggest US market is better positioned to avoid repeat of that scenario..Asia base oils supply outlook: Week of 25 Nov.Asia base oils demand outlook: Week of 25 Nov.Global base oils margins outlook: Week of 25 Nov
