Base Oil SN 500 FD Hamburg eased by 1.02% on 21st November as constant German refinery production, falling crude prices and poor automotive demand upset Group I prices. Blenders are buying on a hand-to-mouth basis (cover 4–8 weeks) and reducing the year-end inventory due to tax considerations, which reinforces bearish sentiment. Group I base oil supplies are growing and producers are looking for export markets, but bright stock remains strained. European Group II base oil prices are also decreasing because of substantial regional premiums over global prices and tightening Group II/I spreads, even though underlying demand is relatively strong. Large U.S. Group II imports continue to come into ARA hubs. Crude oil fell which supported the value of base oil. ChemAnalyst expected further softening in the next week on account of availability and moderate offtake.
Key Highlights
Base Oil SN 500 FD Hamburg prices fell by a further 1.02% on the week from the 21 November level as the second half of 2025 continued to see the erosion of the European Group I market. German refineries are still running at capacity, producing plenty of spot used-lube distillate to more than cover contracts. Crude oil prices have been dropping over the first three weeks of November, reducing feedstock costs and motivating sellers to increase discounts to get rid of material.
Demand for automotive lubricants remains particularly weak just ahead of the winter lull. The strict hand-to-mouth purchasing pattern remains firmly intact as blenders and distributors throughout Germany as well as the rest of Europe are limiting their buys to immediate 4–8 week cover, which continues to put downward pressure on spot and contract pricing. Several companies are deliberately reducing their year end tank stocks as to avoid higher taxes and a drain on working capital, a tactic which usually crowds out base oil buying interest in November/December.
Some German blenders reduced their finished-lubricant range in the remainder of the year. Stocks of API Group I base oil at refineries, particularly in north Germany are steadily accumulating. Producers are aggressively pursuing export sales to place substantial parcels at prices above fuel-grade distillates.
European base oil Group II prices are also easing after being high for good part of the year. Participants point out that the substantial premium Group II still enjoys over similar grades in Asia and the US as well as the shrinking discount to domestic Group I will eventually have them sliding even further. Some selective discounting has already been seen in Germany. Underlying demand for Group II seems to hold up better than Group I despite the price weakness, with constant demand coming from high performance automotive and industrial formulations.
The arrival of large volumes of U.S.-based Group II base oil in Antwerp-Rotterdam is continuing, with at least two more cargoes scheduled before the end of the year.
ChemAnalysts anticipate that base oil will continue to weaken in the next week of November 2025 on the back of strong domestic production, falling prices of crude and feedstock, and persistently subdued automotive pull.
