· Diesel prices hold steady versus crude oil, well up from recent lows in April, well down from highs in 2022.· Firmer diesel values and weaker base oils export prices incentivize refiners to focus more on middle distillates production to limit base oils surplus.· US supply shows signs of rising in early Q2 2023, reflecting importance of export market to clear persistent surplus.· US base oils supply likely to get boost in coming weeks following completion of plant maintenance work and as domestic demand faces seasonal slowdown.· US market likely enters Q3 2023 with smaller supply surplus than at start of Q2 2023 after wave of exports cuts supply overhang.· US refiners would need to maintain lower output or higher exports to counter impact of seasonal slowdown in domestic demand.· Argentina’s base oils supply falls to ten-month low in May on simultaneous drop in domestic production and imports..· Slowdown in imports highlights closed arbitrage from markets like Asia and Mideast Gulf, leaving Argentina reliant on US for almost all its overseas supplies.· Slowdown in Argentina's base oils production could reflect recent dip in domestic lube demand.· Signs of artificial pick-up in Argentina’s lube demand in Q2 2023 could leave base oils supply tight.· Europe’s Group I base oils supply likely to stay lower in Q3 2023 amid plant maintenance work at several plants in Mediterranean region, combined with loss of Russian supplies.· Europe’s base oils supply shows signs of rising in early Q2 2023, cushioning impact of subsequent plant maintenance work.· Italy’s April base oils output rises at same time as demand stays lower, leaving more surplus supplies to move to outlets like West Africa..· Italy shows signs of persistent large surplus of Group I base oils when domestic production operates normally.· Trend points to structural base oils surplus and boosts attraction of cutting production capacity.· Extended shutdown or closure of Group I base oils capacity in Italy leaves European market short, especially following removal of Russian supplies from regional market.· Trend creates dilemma for refiners targeting firmer margins and for blenders seeking stable supplies.· Prospect of drop in surplus Group I supplies from Italy creates dilemma for buyers in West Africa as they seek alternative cargoes in place of shipments from Russia.· Spain’s April Group I base oils output falls as refiners boost production of diesel.· Refiners face conflicting signals as strong base oils values versus diesel and crude incentivize higher output, while weak lube demand incentivizes lower output..· UK’s April base oils exports rise to EU, slump to non-EU markets like Africa..· Trend coincides with steep premium of Europe base oils prices vs export prices, incentivizing refiners to focus on regional demand.· Persistence of wide regional base oil premium vs export prices into start of Q3 2023 set to maintain incentive for European refiners to limit exports to more distant markets.· Slowdown in UK base oils exports contrasts with surge in UK’s April base oils supply, raising prospect of supply-build to clear over following months..Global base oils – week of July 3: Price outlook - margins.Contact us for more information about the data for these stories
· Diesel prices hold steady versus crude oil, well up from recent lows in April, well down from highs in 2022.· Firmer diesel values and weaker base oils export prices incentivize refiners to focus more on middle distillates production to limit base oils surplus.· US supply shows signs of rising in early Q2 2023, reflecting importance of export market to clear persistent surplus.· US base oils supply likely to get boost in coming weeks following completion of plant maintenance work and as domestic demand faces seasonal slowdown.· US market likely enters Q3 2023 with smaller supply surplus than at start of Q2 2023 after wave of exports cuts supply overhang.· US refiners would need to maintain lower output or higher exports to counter impact of seasonal slowdown in domestic demand.· Argentina’s base oils supply falls to ten-month low in May on simultaneous drop in domestic production and imports..· Slowdown in imports highlights closed arbitrage from markets like Asia and Mideast Gulf, leaving Argentina reliant on US for almost all its overseas supplies.· Slowdown in Argentina's base oils production could reflect recent dip in domestic lube demand.· Signs of artificial pick-up in Argentina’s lube demand in Q2 2023 could leave base oils supply tight.· Europe’s Group I base oils supply likely to stay lower in Q3 2023 amid plant maintenance work at several plants in Mediterranean region, combined with loss of Russian supplies.· Europe’s base oils supply shows signs of rising in early Q2 2023, cushioning impact of subsequent plant maintenance work.· Italy’s April base oils output rises at same time as demand stays lower, leaving more surplus supplies to move to outlets like West Africa..· Italy shows signs of persistent large surplus of Group I base oils when domestic production operates normally.· Trend points to structural base oils surplus and boosts attraction of cutting production capacity.· Extended shutdown or closure of Group I base oils capacity in Italy leaves European market short, especially following removal of Russian supplies from regional market.· Trend creates dilemma for refiners targeting firmer margins and for blenders seeking stable supplies.· Prospect of drop in surplus Group I supplies from Italy creates dilemma for buyers in West Africa as they seek alternative cargoes in place of shipments from Russia.· Spain’s April Group I base oils output falls as refiners boost production of diesel.· Refiners face conflicting signals as strong base oils values versus diesel and crude incentivize higher output, while weak lube demand incentivizes lower output..· UK’s April base oils exports rise to EU, slump to non-EU markets like Africa..· Trend coincides with steep premium of Europe base oils prices vs export prices, incentivizing refiners to focus on regional demand.· Persistence of wide regional base oil premium vs export prices into start of Q3 2023 set to maintain incentive for European refiners to limit exports to more distant markets.· Slowdown in UK base oils exports contrasts with surge in UK’s April base oils supply, raising prospect of supply-build to clear over following months..Global base oils – week of July 3: Price outlook - margins.Contact us for more information about the data for these stories